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CROSS CURRENTS 
IN EUROPE TO-DAY 



BY 
CHARLES A. BEARD, Ph.D., LL.D. 




BOSTON 
MARSHALL JONES COMPANY 



CONTENTS 

LECTURE PAGE 

Preface v 

I. Diplomatic Revelations: Franco-Rus- 
sian i 

II. Diplomatic Revelations : English Under- 
standings 28 

III. Diplomatic Revelations: The Central 

Powers -56 

IV. The Economic Outcome of the War . . 83 
V. The New Constitutions of Europe . . 140 

VI. The Russian Revolution 163 

VII. The Rise of New Peasant Democracies . 182 

VIII. Socialism and the Labor Movement . 202 

IX. America and the Balance of Power . . 239 

Conclusions 263 

Note on Sources for I. II. and III. . . 273 

Bibliography 276 



vii 



CROSS CURRENTS 
IN EUROPE TO-DAY 



CROSS CURRENTS 
IN EUROPE TO-DAY 



DIPLOMATIC REVELATIONS: 
FRANCO-RUSSIAN 

THE study of European affairs is no academic 
exercise for Americans; it runs to the roots of 
our national destiny. Our fate is not fashioned 
by domestic policies alone. Indeed, no wise domestic 
policies can be framed without reference to the 
course of world events. There has been no gen- 
eral war in Europe for more than two hundred years 
in which America has not taken part. As English 
colonies we participated in the War of the Spanish 
Succession at the opening of the eighteenth century; 
as an independent nation we shared in the responsi- 
bilities of the World War at the beginning of the 
twentieth century. Every concept of civic duty in 
war and peace, every dream of national grandeur 
has rested and must rest at bottom upon some foun- 
dation of international policy. 

True as this was in 19 14, it is still more true 
today. In foreign trade, in mercantile marine, in 
world finance, in sea power — in all matters respect- 

1 



2 CROSS CURRENTS IN EUROPE 

ing responsibilities and menaces in the international 
sphere — the United States has marched in seven 
league boots since August i, 19 14. Rome in the 
days of the first Triumvirate, Britain under the 
administration of William Pitt, America at the hour 
of Lincoln's first inauguration faced no problems 
greater than those which confront the government 
and people of the United States today. Their own 
fate they might control, but it is not in their hands 
alone. A single shot at Serajevo may send boys from 
the hills of New England and the plains of Kansas to 
die upon the banks of the Piave. There is now a web 
of international relations — trade, finance, and inter- 
course — so fine in mesh and so tough in fibre that 
no sword can cut it. The East and the West have 
met and they are one. The world is an economic 
unit and the United States is being woven into the 
very fabric of that unity. To study the nature of the 
fabric and the operations that weave it — surely 
'there is no greater obligation, public or private, 
than this. 

In this spirit the topics which follow were chosen. 
These pages attempt no mere chronicle of a few 
momentous years. They do not deal with personal- 
ities as such. They pass no judgments upon the 
motives and policies of the actors in the great drama 
that opened on August 1, 1914. It is no part of my 
design to discuss the remote or immediate causes of 
the war or to consider in any form the question of 
responsibility for bringing that calamity upon man- 
kind. These pages simply deal with facts and 
themes which, in my opinion, most vitally concern 



DIPLOMATIC REVELATIONS 3 

Americans here and now confronted with the task 
of arriving at some worthy concept of national 
policy, domestic and foreign. 

The task of selecting the material is necessarily 
a delicate one. Each of us must perforce see what is 
behind his own eyes. No person, aware of the 
mysteries and presences that surround the path of 
mankind, as it stumbles forward through the years, 
will have overweening confidence in his ability to 
divine the future through the murky shadows of 
the past. Still we cannot escape an obligation by 
confessing its difficulties and it may be that in a mul- 
titude of councils there is some wisdom along with 
much error. 

From what has just been said, it is clear that no 
apology need be offered for devoting two lectures to 
the diplomatic methods of Europe which have re- 
cently been revealed to us by one of the strangest 
strokes of fortune in all history. Diplomacy, as a 
score of writers have warned us, is the danger point 
of democracy. The management of relations among 
nations must of necessity be entrusted to a small 
number of persons. No congress of 435 members, 
no parliament of 570 members could possibly carry 
on the diplomatic intercourse required by modern 
international life. How European diplomats have 
operated within their sphere during the past few 
years becomes therefore a theme of absorbing in- 
terest to Americans, for the gentlemen who sit 
around the council tables of Europe help to deter- 
mine our fate as well as their own. 

For many long years we have lived in the mists 



4 CROSS CURRENTS IN EUROPE 

of official propaganda. Shortly after the Great 
War opened, each of the belligerent governments 
published a volume of carefully selected papers. 
The purpose in every case was the same, namely, to 
prove the guilt of the enemy and the innocence of the 
publisher. On the basis of these official papers, skill- 
fully chosen by the parties to the case, editors, pro- 
fessors, and publicists wrote books, pamphlets, and 
leading articles, all designed to support the official 
theses put forward by their respective governments 
and to stir up the war fever necessary to sustain 
the fighting to the bitter end. The propriety of this 
is not here questioned. In time of war reason as 
well as law must be silent; but to continue fostering 
in time of pe'ace the passions of war surely has no 
defenders among those, who seek guidance for the 
future in the experience of the past. 

Had the war ended in a stalemate, our knowledge 
of the origins of the conflict and the diplomatic 
methods which precipitated it would be limited to 
the official statements made by the gentlemen respon- 
sible for it. But the war did not end in a stalemate. 
The several belligerents did not emerge with their 
political machines intact. The Germans, during 
their occupation of Belgium, searched the Belgian 
archives and published sheaves of important secret 
papers. The Bolsheviki, on overthrowing the old 
Russian government, exposed to the gaze of the 
astonished world the Secret Treaties and hundreds 
of diplomatic documents relative to Entente diplo- 
macy before the war. The German Social Demo- 
crats, after the November revolution, opened the 



DIPLOMATIC REVELATIONS 5 

archives of Wilhelmstrasse. In Vienna, the down- 
fall of the Dual Monarchy was followed by the pub- 
lication of important papers taken from the Austrian 
foreign office. The archives of London, Paris, and 
Rome are still secure under lock and key, but the 
thousands of secret papers from other capitals enable 
us to form some idea of the marvels concealed from 
our gaze in those quarters. 

Never before has a generation called upon to 
wage a great war been given an opportunity to dis- 
cover the methods which precipitated the crisis 
from which it suffered. Usually fifty or a hundred 
years are allowed to pass before the public is given 
access to the pertinent papers; that is to say, 
when it is too late for citizens to form any judgment 
on current policies and practices., governments open 
their archives. But the fortunes of the last war 
proved an exception to the rule. Now within 
eight years of the opening of the conflict we have 
the most priceless records, the most secret docu- 
ments, the most confidential memoranda revealing 
the spirit and technique of the diplomacy which 
preceded the war. We are now able to compare 
official theses with official facts and to measure prop- 
aganda against reality. The debts, deficits, indemni- 
ties, paper money, and industrial crisis from which 
Europe suffers present nothing new to students of 
human affairs, but the revelation of the methods 
which diplomats employed for years before the war 
is new and marvellous beyond anything that has 
happened since November n, 1918. 

Students of history and diplomacy knew, of course, 



6 CROSS CURRENTS IN EUROPE TO-DAY 

long before the Great War burst upon the world in 
19 14 that the embattled powers on both sides were 
united by ties of some kind; but the nature of these 
agreements, the extent of the obligations created, the 
inner designs of the diplomatic negotiations accom- 
panying them were all mysteries . In vain did mem- 
bers of parliamentary bodies elected by millions of 
voters ask foreign ministers for explanations, de- 
tails, and precise information. In vain did citizens, 
editors, publicists, and political leaders demand to 
know the character of the obligations which in the 
hour of crisis the masses would be called upon to 
assume. Their pleas and their demands alike met 
indifference, contempt, or evasion. Behind closed 
doors diplomats exchanged pledges and created sit- 
uations which drove Europe relentlessly into the 
abyss. Out of the millions that went forth to die, 
out of the millions that stayed at home to suffer 
and bear burdens, only a handful — a score or more — 
knew by what process the terrible denouement had 
been brought to pass. 

The remedy for this state of affairs in diplomacy 
lies in no mere institutional changes. It lies in an 
ever growing body of enlightened citizens who do 
their own thinking and are not deceived by official 
propaganda. They will find in the diplomaticrevela- 
tions of the past five years lessons of prime impor- 
tance for the future. Europe may live forever, if it 
so chooses, under the shadow of diplomatic delusion 
and deception, but it is not necessary, certainly it is 
not expedient, that America should do so. 



DIPLOMATIC REVELATIONS 7 

NEW MATERIALS ON RUSSIA'S 
BALKAN POLICY 

We shall start with the Russian documents, for 
in the order of time, Russia was the first to bare 
her records. It is important however to warn the 
reader against forming any final conclusion until the 
data of the Austrian and German papers are all in. 
Even then it must be remembered that we are not 
dealing with the fundamental and underlying causes 
of the war, but with secret diplomacy as such. 

Immediately after the overthrow of the Tsar 
in March, 19 17, all kinds of rumors and reports 
about domestic dissensions over foreign policy be- 
gan to flow out of Russia. The new revolutionary 
government, hard beset by a still more revolutionary 
peace party, found it difficult to defend the war 
program of the old regime and the avowed aims of 
the Allies. Indeed the revolutionary leaders in the 
streets, who were in time to possess the machinery 
of state, demanded a repudiation of all designs 
savoring of annexations, indemnities, and imperial- 
ism. When the Bolsheviki finally got possession 
of the government, they found it in keeping with 
their principles and useful in their tactics to discredit 
the policies of the Tsar. Accordingly they began 
to publish treaties, notes, and papers taken from 
the Russian archives all tending to show the im- 
perialist ambitions of England, France, Italy, and 
the Tsar's government. In November, 19 17, they 
gave out to the world a long report composed of 
notes and extracts from letters exchanged among 



8 CROSS CURRENTS IN EUROPE TO-DAY 

the Entente Allies relative to the proposed distribu- 
tion of the spoils at the close of the war — the 
famous "Secret Treaties." Among other things, 
England was to take a benevolent attitude toward 
Russian pretensions at the Straits and receive in 
return adequate compensations. Russia was to have 
a free hand in arranging her Polish frontiers; 
France was to have Alsace-Lorraine and create a 
neutral autonomous state on the left bank of the 
Rhine. In the months and years that followed, the 
Bolsheviki continued to issue selections from the 
Russian archives. Some of these were published in 
booklets and others in the official newspapers, 
Pravda and Isvestia. 

In these documents we may trace, as under the 
rays of a great searchlight, the important relations 
of Russia to Europe and Asia from 1908 onward. 
In particular, is it easy to trace the plans adopted 
by Russia to counteract the relentless economic 
advance of Germany and Austria in southeastern 
Europe. 

The story opens with the record of measures to 
be taken in the Balkan's. In January, 1908, after 
its accounts had been settled with England and Japan 
the Russian government had a free hand and began 
a forward policy in southeastern Europe. This 
policy, in its general terms, had been agreed upon 
several months before the annexation of Bosnia 
and Herzegovina by Austria. It was discussed at 
a grand council of the civil and military authorities 
held early in the year; but it was not immediately 
put into active force. There was no want of desire 



DIPLOMATIC REVELATIONS 9 

but, as the military men pointed out, the Russian 
army had not recovered from the defeat at the 
hands of Japan and the Tsar, who had just escaped 
from a revolution by the skin of his teeth, did not 
dare to risk another crisis soon. So for several 
months, the Russian foreign office was circumspect 
though determined. It confined its activities to 
very moderate and restrained diplomatic maneuvers 
preparatory to something more vigorous to 
follow. 

When later in the year, Austria-Hungary seized 
Bosnia and Herzegovina, the Serbs appealed to St. 
Petersburg for aid; but the Russian government, 
aware that it was in no condition for another war, 
gave counsels of caution while adding assurances of 
something substantial to come later. In October, 
1908, the Russian ambassador, Isvolski, said to the 
Serbian minister at Paris : "Serbia will lose nothing 
as a result of the step taken by Austria, but will ac- 
tually gain from it. You Serbs cannot think of dis- 
lodging Austria-Hungary from Bosnia and Herze- 
govina by arms. . . . Hitherto we have always sus- 
tained Serbia and we shall support her in the future, 
always and with all possible means." A few months 
later, namely in March, 1909, the Russian govern- 
ment informed Serbia that "when her equipment 
is ready, Russia will renew the matter with Austria- 
Hungary. Serbia should not go to war, because that 
would be suicide. . . . Conceal your intentions and 
prepare yourselves because the days of joy will 
come." 

From that time forward, as the records clearly 



IO CROSS CURRENTS IN EUROPE TO-DAY 

show, Russian diplomacy, restless, aggressive, and 
covert, was directed toward one end: the formation 
of combinations of power and the pursuit of meas- 
ures likely to dissolve the Austro-Hungarian 
empire in a general European war. This is the 
substance of the first revelations from the Russian 
archives. Russian diplomats, having made sure of 
Asiatic matters by understandings with England and 
Japan, had firmly resolved, by 1908, to break up 
the Dual Monarchy. For six years they bent 
every energy to that enterprise. The Tsar's agents 
knew that Germany was allied with Austria and 
would not stand idly by while Russia and Serbia 
carried out their plans. For that reason Russia 
resolved to make the issue general, drawing into 
the affair both France and England. Meanwhile 
Russia kept Serbian nationalism aflame by assuring 
the Serbs that the day of liberation would come. 
In January, 19 14, the Serbian minister, Pashitch, 
asked the Tsar whether he would give one of the 
grand duchesses in marriage to the Serbian Crown 
Prince. The Tsar was delighted with the idea, al- 
though he declined to dictate in an affair of the heart. 
Then the minister, in a burst of ecstacy, said: "She 
would enjoy the affection of all the Serbian people, 
and if God and circumstances permit she will become 
the queen of all the Slav nations of the South. Her 
glory and her influence will spread throughout the 
Balkan peninsula." Such was the grand Serb dream : 
Break up Austria-Hungary, unite the South Slavs, 
and bind Russia and Slavia in matrimony. So 



DIPLOMATIC REVELATIONS II 

Serbia and Russia set out together on their way 
to the "joyous days." 

On the lengths to which the Russian leaders were 
prepared to go and the means which they were 
willing to employ, there are two important letters 
from the Russian archives. In 191 1, the Russian 
ambassador at Paris wrote home: "If we have de- 
cided to raise the question of the Straits [the Turk- 
ish question], it is of the highest importance in that 
regard to have a favourable press here. Unfor- 
tunately, I am in that respect deprived of the most 
important means, since my insistent requests for 
funds for the press have produced no results. I 
shall naturally do all that is in my power, but it is 
a matter in which public opinion, for traditional 
reasons, is against us. As an example of the utility 
of having money for the press, I may cite the affair 
of Tripoli. I know howTittoni (Italian ambassador 
at Paris) won over the leading French journals avec 
la main largement ouverte." 

This compelling argument evidently had the de- 
sired result at St. Petersburg, for shortly afterward, 
M. Isvolski wrote to his superior at home: "I 
am trying to maintain the desirable feeling in gov- 
ernmental and political circles and at the same time 
am attempting to influence the press. In this respect 
very remarkable results have been attained, thanks 
partly to measures previously taken. As you know 
I do not distribute the subsidies directly, but the 
distribution is made in co-operation with the French 
minister, and has already had the necessary effect. 



12 CROSS CURRENTS IN EUROPE TO-DAY 

I myself am endeavoring to guide the more important 
newspapers in Paris, such as the 'Temps,' the 'Jour- 
nal des Debats,' and the 'Echo' through personal 
influence." 

THE FRANCO-RUSSIA. N ALLIANCE 

It was obvious to the directors of the Muscovite 
foreign policy that Russia alone could not effect a 
dissolution of Austria-Hungary and bring about a 
realization of the grand Pan-Slav, Pan-Serb dream. 
It was well known that Germany and Austria Hun- 
gary, to say nothing of Italy, were knit together in 
a firm alliance and that the former would not stand 
idly by while her only undoubted friend in Europe 
was overwhelmed in battle. It was necessary, there- 
fore, to secure active assistance from France and 
if possible from England. This was an accepted 
axiom in Russian diplomatic circles. The formula 
is set forth with great clearness in a letter from 
the Russian ambassador at London directed to his 
home government on November 20, 19 12. After 
speaking of a conversation with Sir Edward Grey, 
who disclaimed any intentions of aggression against 
Germany, the ambassador said: "He has told me 
enough to prove to us that under certain special 
conditions, England would enter the war. For this, 
in my opinion, two conditions are necessary: in the 
first place, the active intervention of France must 
make this war a general one; secondly it is absolutely 
necessary that the responsibility for the aggression 
fall upon our opponents. I believe it is imperative 
that we keep this point well in mind. First of all it 



DIPLOMATIC REVELATIONS 13 

involves the necessity of maintaining the principle 
of our own disinterestedness. ... It will be neces- 
sary to emphasize the aggressive character of Aus- 
trian and German policy. . . . The question of who 
is to be the aggressor will be of greatest signif- 
icance. Only under these circumstances would the 
British government have the support of public opin- 
ion which the government needs for energetic action. 
Grey and his ministerial colleagues are, no doubt, 
occupied with reflections of this kind. I see the echo 
of them in the answer he has given to the question I 
put to him." Without doubt, this Russian analysis 
of the problem in 19 12 was a sound one. If the de- 
sign was to succeed, it was imperative that the 
active intervention of France should make the war 
a general one, in which England might participate, 
under special conditions, particularly if the burden of 
aggression fell upon the Teutonic powers. 

The Russian approach to France was natural and 
easy. The two countries had been united by a firm 
alliance since 1891, and their diplomatic negotiations 
were close and active. The exact nature of the 
alliance, however, was not known outside the official 
circles. Again and again questions had been put 
by curious members of the French Parliament, but 
the ministry had carefully avoided giving any pre- 
cise information. 

It was not until after the Bolsheviki had begun to 
publish the old Russian archives that the French 
government thought it wise and fitting to let the pub- 
lic know the exact nature of the obligations that 
bound France and Russia under the agreement of 



14 CROSS CURRENTS IN EUROPE TO-DAY 

1 89 1 . In 1 9 1 8 the French ministry issued its famous 
Yellow Book containing a number of selected papers 
bearing on the alliance. These have been subjected 
to many critical examinations. A member of the 
Institute, M. Welschinger, for example, has 
reprinted most of the papers and illuminated them 
by invaluable comment in his L' Alliance Franco- 
Russe. In this small but valuable treatise we can 
trace the history of this fateful combination of 
powers. 

Without going back of 1886, it appears that Kat- 
kof, the editor of the Moscow Gazette, and Elie de 
Cyon began in that year their propaganda for a 
Franco-Russian understanding. We may dismiss 
as hardly relevant the German accusation that Kat- 
kof received money from de Lesseps to carry on his 
operations. The next year, between May and Dec- 
ember, important relations were established between 
the Russian Ministry of Finance and the Haute- 
Banque Franchise which ended in an arrangement 
with the Rothschilds for a grand debt conversion 
and opened the French financial market wide for 
Russian loans. 

Between 1880 and 1905, according to Welsch- 
inger's estimates, at least sixteen Russian loans were 
floated in France amounting all together to about 
twelve billion francs, not counting underwritings for 
many railways, banking institutions, and private en- 
terprises. After 1905 the amount was increased by 
still greater advances. "The success of the Russian 
loan of 1888," remarks Welschinger, "facilitated by 



DIPLOMATIC REVELATIONS 15 

the Credit Foncier, had a remarkable effect upon 
the concord so heartily desired." 

Newspaper propaganda was under way. Finan- 
cial relations were being forged in bonds of gold. 
The French government sent a squadron to the 
Baltic on a pleasure trip, and the Tsar received it 
with a great show of affection even though it in- 
volved his standing hat in hand while the Marseil- 
laise, played by a band of sansculottes, beat upon his 
imperial ears ! At the same time, General Boisdeffre, 
of the French general staff, attended the grand 
Russian manoeuvres and was delightfully entertained 
by his new companions-in-arms. The Marquis de 
Breteuil, a French gentleman of the old school, 
visited the Russian ambassador at a watering place 
and discussed with him, quite informally of course, 
the idea of an entente between the two countries. 
Then the head of the Russian foreign office wrote, in 
a general way, that a cordial understanding between 
the two countries would be the best guarantee of 
peace and necessary to maintain a just balance of 
European powers. The French foreign minister 
replied favorably, saying that he was prepared to 
"examine the suggestions" on the subject of an alli- 
ance as a protection in case of a threat of hostilities 
on the part of the Triple Alliance. 

After many pourparlers and much correspondence, 
the understanding was embodied in an exchange of 
notes, formally concluded on August 21, 1891. The 
text of the document is very short. The object of 
the accord is said to be the maintenance of the gen- 



l6 CROSS CURRENTS IN EUROPE TO-DAY 

eral peace. The two governments agree to act in 
concert on every question that threatens to put 
peace in jeopardy. They also agree to discuss at once 
the measures necessary for simultaneous cooperation 
in case of war. 1 

The gentlemen's understanding was supplemented 
by conversations between representatives of the two 
general staffs — conversations which bore fruit in 
a military convention formally concluded on January 
4, 1894. This convention provided for combined 
and instant operations in case either of the parties 
was attacked by any of the powers of the Triple 
Alliance, for immediate mobilization without pre- 
liminary notice, and for forward movements to the 
frontiers. The number of men to be employed 
against Germany was agreed upon, future conferen- 
ces were provided for, a no-separate-peace clause 
was inserted, the duration of the convention was 
fixed at the life of the Triple Alliance, and strict 
secrecy was pledged. 

Fetes, exchanges of visits, military conferences, 
felicitations, and vague allusions to the new friend- 
ship between France and Russia followed the ratifica- 
tion of the agreements. There was an abundance of 
conversations and correspondence. But no one out- 

1 This remained a secret until 1918. As late as 1916, a pro- 
fessional student of European diplomacy, Professor Hayes, had to 
write of this alliance: "Of the exact steps by which the friendship 
of the two nations was transformed into a defensive alliance 
between the two governments little is actually known, but it ap- 
pears that a diplomatic protocol for an alliance was signed in 1891 
and that a military convention was agreed upon in 1894." If this 
is what a careful scholar could find out about the alliance, what 
must the average French or Russian soldier have known about it? 



DIPLOMATIC REVELATIONS 17 

side of the official circles knew just what had taken 
place. Wise men exchanged knowing looks and did 
all that they could to strengthen the ties thus formed. 
The French purse was opened wide to Russian bor- 
rowers. The Paris police were more active in ap- 
prehending Russian refugees from justice. Criticism 
of the Russian autocracy was outlawed in polite 
circles. 

As time went on it occurred to French diplomats 
that the accord was not exactly in the precise terms 
which the situation demanded. In the summer of 
1899 M. Delcasse broached the subject in a conver- 
sation with the Tsar. He pointed out two very 
significant things: First, that the accord was a 
purely defensive one, directed against the Triple 
Alliance and designed merely to maintain the peace 
of Europe, and secondly, that the military conven- 
tion would come to an end with a dissolution of the 
Triple Alliance. The interesting suggestions pro- 
foundly impressed the Tsar, especially as M. Del- 
casse accompanied them by these ingenious reflec- 
tions : "What would happen if the Triple Alliance 
should be dissolved otherwise than by the will of 
its members; if, for example, the Emperor Francis 
Joseph, who appears at the moment to be the sole 
bond of union between the rival, yes, belligerent, 
races of Austria-Hungary, should suddenly die; if 
Austria were menaced by a dislocation which per- 
haps is desired in some quarters, which perhaps one 
might favor, and in which one, in any case, might 
be led to wish to take part? What matter is more 
likely to break the general peace and destroy the 



l8 CROSS CURRENTS IN EUROPE TO-DAY 

European balance of power? And what matter 
more seriously requires the union of France and 
Russia not only in the same design but in its execu- 
tion? Now it is exactly at the precise hour when 
the military convention should come into play that 
it ceases to exist; born of the Triple Alliance it would 
vanish with it." 

The argument of M. Delcasse, the implications of 
which are too patent to call for comment, touched the 
Tsar in a tender spot. An exchange of notes was 
at once begun ending in a revision of the accord of 
1 89 1. The original understanding stated that 
France and Russia were desirous of maintaining the 
general peace; the revision of 1899 adds "and the 
equilibrium of the European powers." The orig- 
inal military compact provided that it should last 
as long as the Triple Alliance; the revision of 1899 
stipulates that it shall remain in force as long as the 
diplomatic agreement concluded for the purpose of 
safeguarding the common and permanent interests of 
the two countries. 

From year to year the military bonds of the high 
contracting parties were strengthened by numerous 
conversations. Finally, in 19 12, the Tsar expressed 
to the French ambassador his desire for a naval con- 
vention drawn along the lines of the military under- 
standing. The appropriate negotiations were held 
and in midsummer the new document was signed. 
This agreement provided for naval co-operation in 
case of war. The details were to be worked out 
by supplementary conversations. The proper 
naval authorities were instructed to study the vari- 



DIPLOMATIC REVELATIONS 19 

ous hypotheses of war, to correspond directly, to 
arrange strategic programs, and to keep their 
affairs under the bond of secrecy. 

In the light of what we now know of the Russo- 
French alliance, of the modifications made in the 
text in 1899, an d of the long military negotiations, 
between the two powers, the debates that arose in 
the French Parliament from time to time between 
1 89 1 and 19 14 on the fateful agreement take on a 
new significance. More than once, members of the 
Chamber of Deputies attempted to draw the min- 
isters out on the question of the exact relations es- 
tablished by the understanding. In November, 
1896, M. Millerand asked whether it was a simple 
treaty or a military convention that bound the two 
countries and what were the extent and bearing of 
the agreement. In the midst of considerable dis- 
turbance he expressed astonishment that he, a 
deputy, was not permitted to inquire about the na- 
ture of the accord. "Is the republic," he exclaimed, 
"the government of the people bound to hand over 
to a few men the uncontested direction of its des- 
tiny?" M. Jaures said that it followed from the 
uniform silence of the minister on the subject that 
the treaty was an illusion or more likely that the gov- 
ernment of France had lost the right to speak freely 
to France. The minister of foreign affairs replied 
simply that the country and all reasonable statesmen 
approved the Russian policy. He added that every- 
thing that could and should be safely said in public 
had already been said. He refused to go into de- 
tails and the Chamber approved his reticence. 



20 CROSS CURRENTS IN EUROPE TO-DAY 

Two years later another debate arose. Again 
M. Millerand and M. Jaures wanted to know the 
exact nature of the treaty. Once more the minister 
of foreign affairs replied simply in generalities. He 
told them that it was impossible to make known the 
terms of the entente — the facts spoke so loudly 
that it was not necessary to say anything more. 
For the Chamber of Deputies that laconic remark 
was sufficient to warrant a vote of approval. 

Thirteen years more elapsed. Momentous 
events had taken place. All members of the inner 
circle knew that Europe trembled on the verge of 
a crisis. On April 6, 191 1, a stormy debate arose 
in the Senate. Pacifists assailed the treaty as a 
cause of war. Intransigents wanted to know 
whether the treaty had not merely guaranteed the 
status quo to the advantage of Germany. That 
was a delicate subject, but the minister of foreign 
affairs did not shrink from it. He replied hotly 
that the treaty did not merely guarantee the status 
quo but covered all eventualities and permitted the 
contracting parties to conceal their policies and 
draw all possible advantages from the concert. He 
warned them that the matter of Alsace-Lorraine 
would have to be settled before the pacifist idea of 
general arbitration could be adopted — a statement 
which brought the assembly to its feet. "We are 
pacific," he declared, "but we say that too often 
and sometimes too loudly." He closed by telling 
them that France would be firm in respecting all 
rights and equally firm in discharging all her duties. 
Once more the answer of the minister proved satis- 



DIPLOMATIC REVELATIONS 21 

factory to the great majority of his colleagues. The 
grand alliance remained curtained in darkness. 

Running through the serried documents is the 
thread of the lost provinces. The Tsar once re- 
marked to M. de Montebello: "I often hear 
people speak of the ideas of revanche which exist 
among you and are used as a menace. I see no justi- 
fication for that. You would not be good French- 
men if you did not cherish the thought that a day 
will come in which you may enter into possession 
of your lost provinces; but between that sentiment 
and the idea of a provocation to realize it there 
is a great distance, and you have proved it many 
times — and have proved it again — that you wish 
peace above all and that you know how to wait with 
dignity." While the negotiations were on between 
the military men of the two countries, the Russian 
representative frankly asked this question: "When 
you once have your military convention signed will 
you not precipitate things and make war?" It was 
for that very reason that the Tsar once insisted on 
a provision declaring the treaty void if war was 
provoked by France ; but his fears seem to have been 
allayed — to some extent, as the above remark im- 
plied. 

In the course of the debates in the French Parlia- 
ment, the same theme came up in various forms. 
In 1896, M. Millerand wanted to know what ad- 
vantages had been secured in return for the engage- 
ments with Russia and whether obligations of ac- 
tive friendship had been imposed on the new ally. 
He bluntly asked whether it was necessary for 



22 CROSS CURRENTS IN EUROPE TO-DAY 

France to resign herself to the acceptance of the 
fait accompli — making an evident allusion to Alsace- 
Lorraine that called forth great applause. He was 
especially eager to know whether the country in- 
curred the risk of being abandoned in an hour of 
grave danger. In the later debates, the same burn- 
ing issue arose and the minister for foreign affairs, 
while refusing to be precise, gave his auditors to 
understand that the accord with Russia did not pro- 
vide for a mere guarantee of the status quo, but 
for all eventualities. It was not necessary to say 
more. 

FRANCO-RUSSIAN DIPLOMATIC 
NEGOTIATIONS, 

1912-1914 

Such was the union between France and Russia 
when the latter decided, in 1908, upon a liquida- 
tion of the Austro-Hungarian empire; but for the 
moment the outlook at Paris was not favorable. 
It was not until 19 12 that the Russian diplomats 
at work on the new forward policy found condi- 
tions in France somewhat in line with their purposes. 
In that year there came a turn in French affairs. 
The action of Germany in forcing a readjustment of 
the Moroccan estate in 191 1, aroused France and 
was represented in the intransigent French press as 
a piece of brutal aggression. In January, 19 12, the 
Caillaux cabinet, committed to a policy of friendly 
relations with Germany, was forced out of office, 
and there then came to power M. Raymond Poin- 
care, an avowed champion of peace, "united with 



DIPLOMATIC REVELATIONS 23 

firmness and preparedness." An eminent French 
publicist, M. Albin remarks of M. Poincare: 
"From his clear and trained mind, from his firm 
will, from his character as a Lorrainer, little given 
to accommodations, France expected enlightened di- 
rection, a beneficent influence on political events, 
and in foreign affairs a firm and active policy worthy 
of the past of France, worthy of the role she had 
played in the world and of the place she should 
occupy in the future. ... As the result of a coin- 
cidence due to no mere play of ministerial combina- 
tions, M. Poincare, at the same time, took charge 
of the portfolio of foreign affairs." For a year 
M. Poincare directed the French foreign policy as 
prime minister. Then he was elected President and 
for seven years more exerted a powerful influence 
on French foreign and domestic policies. 

It is evident from the documents taken from 
the Russian archives and published to the world, 
that M. Poincare took an active, rather than a pas- 
sive, attitude in the matter of Russian relations. If 
the Russian ambassador at Paris had found nego- 
tiations difficult before 1912, he had no reason to 
complain upon the installation of M. Poincare. 
Shortly after the latter became prime minister and 
minister of foreign affairs, M. Isvolski, the Tsar's 
representative in France, wrote home a very illumi- 
nating letter to the effect that the new French 
leader was taking the initiative and that Russia 
should by all means meet him half way. A part 
of this note follows: "M. Poincare has several 
times asked me what I know about the exchange 



24 CROSS CURRENTS IN EUROPE TO-DAY 

of opinions concerning Balkan affairs which, ac- 
cording to reports in the newspapers and those com- 
ing from other sources, had taken place between 
you and the Vienna cabinet; in connection with this, 
he reminded me once more of his readiness at al- 
most any moment to enter into negotiations con- 
cerning these matters and gave me to understand 
that he expects us to give him the same thorough 
information concerning our negotiations with 
Vienna that he had received from the London cabi- 
net after the journey of Lord Haldane to Berlin. 
I write all this to you in the fullest sincerity, for 
it seems to me that it is above all important to keep 
in mind and to meet half way the purposes which 
M. Poincare expressed to me upon his entrance into 
office. The present prime minister and minister for 
foreign affairs is an exceedingly great personality 
and his cabinet shows itself as the strongest com- 
bination of power that has existed for a long period 
of years." 

Later in the same year, M. Isvolski wrote home 
a very important letter. He had it from M. Poin- 
care that, in the event of a crisis in the Balkans, 
such as an attack by Austria on Serbia, Russia 
would receive "the most sincere and most energetic 
support" from France during the diplomatic stage 
of the negotiations. In this stage, M. Poincare 
had said, the French ministry would not have the 
support of Parliament or of public opinion, but that 
was only the preliminary. M. Poincare went on to 
add that if diplomatic negotiations led by Russia 
resulted in armed intervention on the part of Ger- 



DIPLOMATIC REVELATIONS 25 

many, France "would not hesitate a minute in ful- 
filling her obligations towards Russia." This letter 
which flashes light into the Balkan darkness must 
be reproduced at length: 

"M. Poincare told me that the French govern- 
ment is first of all considering the question of pos- 
sible international eventualities. It quite realizes 
that this or that event, as for instance, the destruc- 
tion of Bulgaria by Turkey or an attack upon Serbia 
by Austria might force Russia to give up its passive 
attitude and first take diplomatic steps, to be fol- 
lowed afterwards by military measures against Tur- 
key or Austria. According to assurances received 
by us from the French government we can in such a 
case count upon the most sincere and most energetic 
diplomatic support on the part of France. In this 
phase of events, the government of the Republic 
would not be in a position, however, to obtain the 
sanction of Parliament or of public opinion for 
any active military measures. If the conflict with 
Austria, however, should result in an armed inter- 
ference on the part of Germany, France would, as 
a matter of course, look upon this as a 'casus foe- 
deris' and not hesitate a minute to fulfil its obliga- 
tions towards Russia. 'France,' M. Poincare 
added, 'is undoubtedly peaceably inclined, neither 
looking for war nor desiring it. If Germany goes 
against Russia, however, this state of mind will 
change immediately,' and he is convinced that in 
this case Parliament, as well as public opinion will 
unanimously back the government's resolution to 
render armed assistance to Russia. 



26 CROSS CURRENTS IN EUROPE TO-DAY 

"M. Poincare further told me that, in view of the 
critical position in the Balkans, the highest authori- 
ties of the French Military-Command are studying 
with increasing attention all possible military 
eventualities and it was known to him that expert 
and responsible personages held an extremely op- 
timistic view of the Russo-French chances in case of 
a general collision. This optimistic view is based 
on the value attributed to the diversion exercised 
by the united forces of the Balkan states, in draw- 
ing off a corresponding number of Austro-Hun- 
garian forces. The fact that Italy is deprived of 
freedom of movement, owing to the African war 
and a special agreement with France, is another 
point in favor of Russia and France. 

"As to the position in the Mediterranean, the 
resolution just taken of removing the third 1 French 
squadron from Brest to Toulon has enhanced the 
supremacy of the French fleet in these waters. This 
resolution, M. Poincare added, has been taken in 
concurrence with England and forms the further de- 
velopment and completion of the agreements for- 
merly concluded between the French and British 
naval staffs." 

A few weeks later in the same year, the Russian 
ambassador at Paris wrote home again, this time in 
a more decisive tone, reporting a conversation with 
M. Poincare. Here is the important part of the 
Communication: " 'It is for Russia,' he remarked 
to me, to take the initiative in a question [the 
Austro-Serbian affair] in which she is interested 
above all others; whilst it is France's task to give 



DIPLOMATIC REVELATIONS 27 

her full and active support. If the French gov- 
ernment were to take the initiative itself, it would 
either run the risk of exceeding the intentions of 
its ally or of not doing them full justice. . . . All 
in all,' Poincare added, 'this means that if Russia 
makes war France will also make war, because we 
know that Germany will stand by Austria in this 
question.' In answer to my inquiry whether he 
knew England's view in this matter, Poincare said, 
that according to his information, the London cabi- 
net would for the moment confine itself to promis- 
ing Russia its entire diplomatic support, but that 
this would not under certain conditions exclude more 
energetic assistance." 

It is no doubt hazardous to draw conclusions from 
these documents, but two or three seem to be un- 
avoidable. Russia decided early in 1908 on an 
active policy which could not fail to lead to a clash 
with Austria. France later gave her a free hand 
either without knowing what the program of St. 
Petersburg really was or with full knowledge of the 
policy and the consequences. There is no doubt 
that the French prime minister told Russia to take 
the initiative and promised active diplomatic sup- 
port. It is clear also that the French prime 
minister was aware that this might lead to a general 
war by drawing in Germany and involving France. 
It may be that circumstances warranted M. Poin- 
care in following this line, but one thing is certain: 
nobody in France outside of the diplomatic circle 
knew what commitments were being made — com- 
mitments fraught with such agony for mankind. 



II 

DIPLOMATIC REVELATIONS: ENGLISH 
UNDERS TAN DINGS 

STUDENTS of European politics who watched 
the drift of English foreign policy between 
1898 and 1 9 14 were well aware of certain marked 
tendencies. By an alliance with Japan consummated 
in 1902, by a treaty with France concluded in 1904, 
clearing up all points of controversy between the 
two countries, and by a treaty with Russia signed 
in 1907 settling disputed questions, England had 
removed a number of dangerous issues in foreign 
affairs. In defending the Japanese alliance against 
the advocates of isolation, Lord Lansdowne said 
in 1902: "What do we see on all sides? We ob- 
serve a tendency to ever-increasing naval and mili- 
tary armaments involving ever-increasing burdens 
upon the people for the defence of whose countries 
these armaments are accumulated. There is also 
this — that in these days war breaks out with a sud- 
denness which was unknown in former days when 
nations were not, as they are now, armed to the 
teeth and ready to enter upon hostilities at any mo- 
ment. ... If there be no countervailing objections, 
the country which has the good fortune to possess 
allies is more to be envied than the country which is 

without them." The renewal of the Japanese alli- 

28 



ENGLISH UNDERSTANDINGS 29 

ance in another form in 1907 became doubly signif- 
icant, because within a period of a few months the 
world learned of the continuance of the Anglo- 
Japanese arrangements and the formation of a 
Franco-Japanese, a Russo-Japanese, and an Anglo- 
Russian agreement. There were in addition, as 
we now know, secret treaties and negotiations be- 
tween Russia and Japan, with England's consent, 
which had a vital relation to the alignment of mili- 
tary and naval powers for the Great War. But 
English statesmen denied all allegations to the effect 
that these arrangements were connected with a de- 
liberate policy of "encircling" Germany. They 
said at the time that all these agreements grew out 
of the laudable desire of England to be at peace 
with the world and clear away all possible sources 
of misunderstandings with neighboring powers. 

SIR EDWARD GREY OF THE 
ANGLO-FRENCH ENTENTE 

It was known in 19 14, however, that England's 
understandings with France had gone beyond mere 
cordiality, for the Moroccan crises of 1906 and 
191 1 had revealed a close cooperation of the two 
powers in the dealings with Germany. Still the ex- 
act character of the relations between the two coun- 
tries was shrouded in mystery. The naturally sus- 
picious in England thought that some positive agree- 
ments as to cooperation in war had been secretly 
made. There were rumors in the press to that 
effect and more than once the matter came up for 
discussion in Parliament. In March, 19 13, for ex- 



30 CROSS CURRENTS IN EUROPE TO-DAY 

ample, a responsible statesman, Lord Hugh Cecil, 
put the question very bluntly to the government: 
"There is a very general belief that this country 
is under an obligation, not a treaty obligation, but 
an obligation arising owing to an assurance given by 
the Ministry in the course of diplomatic negotia- 
tions, to send a very large armed force out of this 
country to operate in Europe. This is the general 
belief." To this clear-cut query the Prime Minis- 
ter, Mr. Asquith, made a categorioal reply: "I 
ought to say that it is not true." 

Twice during the next year the question was 
again raised as to ( i) whether the country was free 
from all obligations to engage in military operations 
on the continent, and (2) whether there were any 
unpublished agreements with Russia or France which 
would "restrain or hamper" the freedom of the gov- 
ernment or the Parliament in making a decision 
about taking part in a European war. On both oc- 
casions the answer of the responsible ministers was 
emphatically in the negative. The world was 
given the impression that there was no obligation 
on the part of England to come to the aid of France 
on the continent and that no understandings existed 
with either Russia or France which in any way 
bound, restricted, or hampered the government and 
Parliament of England in case a crisis arose in 
Europe. 

When on August 3, 19 14, the great decision had 
to be taken, Sir Edward Grey, in his memorable 
plea for the support of France, revealed for the 
first time the nature of the conversations and un- 



ENGLISH UNDERSTANDINGS 31 

derstandings that had been drawing the two coun- 
tries together during the previous ten years. He 
explained how the French admiralty, on the basis 
of its belief in English friendship and the arrange- 
ments made with the English admiralty, had con- 
centrated its fleet in the Mediterranean and left 
the Atlantic coast of France undefended and how 
the day before he had assured France that, if the 
German fleet came out, England would protect the 
defenceless ports across the channel. He explained 
how naval conversations extending over many years 
had prepared for the immediate and effective co- 
operation of the two powers in case of war. But, 
he added, it had always been understood that these 
consultations did not "restrict the freedom of either 
government to decide at any future time whether or 
not to assist the other by armed force." What, 
therefore, was the nature of the obligation? On 
this point, Sir Edward said: "How far that entails 
an obligation, let every man look into his own heart 
and his own feelings and construe the extent of the 
obligation for himself. I construe it myself as 
I feel it, but I do not wish to urge upon anyone else 
more than their feelings dictate as to what they 
should feel about the obligation." 

To say the least, this was a most extraordinary 
statement. Sir Edward Grey had been carrying on 
secret negotiations and conversations with France 
for many years. Complete plans for the landing 
of English troops on the continent had been made 
and the disposal of the naval forces of the two 
countries had been agreed upon. In the presence 



32 CROSS CURRENTS IN EUROPE TO-DAY 

of a crisis Sir Edward had to reveal them for the 
first time to an astounded Parliament. He pointed 
out that in the written records of the negotiations 
and understandings, full freedom of action had been 
reserved. Nevertheless, some kind of an obliga- 
tion existed. Its extent he left to the consciences 
of the gentlemen who just heard of it for the first 
time in their lives — gentlemen who in the crisis had 
but one choice left to them. As for himself, he felt 
that England now had obligations of friendship 
with France that compelled cooperation in war. 
Still, he did not "wish to urge upon any one else 
more than their feelings dictate as to what they 
should feel about the obligation." Whatever view 
one takes of this amazing revelation, one must admit 
that it makes strange reading beside the statement, 
made by the same speaker earlier in that very year, 
to the effect that "there were no unpublished agree- 
ments which would restrict or hamper the freedom 
of the government or of Parliament to decide 
whether or not Great Britain should participate in 
a war." 

Judgments upon Sir Edward Grey's revelations 
have varied. A highly critical English writer, Mr. 
E. D. Morel, in attacking what he regards as the 
bitter fruit of secret diplomacy, summarizes his 
opinion of the "conversations" arranged secretly 
under Sir Edward's management as follows: 
"These particular 'conversations' meant the elabora- 
tion of an entire plan of campaign, replete in every 
detail, affecting the disembarkation and transport 
over rail and road of an expeditionary force of 



ENGLISH UNDERSTANDINGS 33 

165,000 men — or whatever the exact number may 
have been — with enormous quantities of cannon, 
horses, motors, waggons, stores, and all the impedi- 
menta of a modern army. As with the military, so 
with the naval 'conversations.' 

"You may speak of an understanding whereby 
France concentrated her fleet in the Mediterranean 
and left her western and northern coast line unde- 
fended, in order to leave us freer to concentrate 
in the North Sea as a 'conversation' of no binding 
force until authorized by Parliament. But this is 
the sort of conversation which decides the destinies 
of nations, and when carried on in secret leaves 
the nations concerned entirely helpless to control the 
outcome. The secret conversations begun in 1906 
and thenceforth persisted in constituted morally 
speaking a pledge given to France by the most 
powerful personalities in the British Liberal minis- 
try to join with France in the event of a war be- 
tween France and her only potential foe, Germany. 
Materially speaking they constituted an Anglo- 
French military and naval alliance. I can under- 
stand the argument which says that it was right to 
give that pledge. I can even understand the argu- 
ment which says that it was right, having given that 
pledge, to deny to the House of Commons that it 
had been given. But I do not understand the argu- 
ment which says that the moral obligation and the 
material fact alike meant nothing, until at the 
eleventh hour the House of Commons became aware 
of both and endorsed them." 

Another English writer, at the opposite pole of 



34 CROSS CURRENTS IN EUROPE TO-DAY 

opinion from Mr. Morel, namely, Lord Esher, in 
his book on Lord Kitchener, speaking of this curi- 
ous "obligation" revealed by Sir Edward Grey on 
August 3, says: "To Mr. Asquith the nation owes 
the redemption of its honor, for although he re- 
pudiated the assumption of a definite agreement with 
France, he has been credited by the French ambas- 
sador, M. Cambon, with the fixed determination of 
fulfilling the moral obligation to that country to 
come to her assistance in case of an unprovoked 
attack when the occasion arose; for the obligation, 
as Mr. Asquith knew well, was the inevitable sequel 
to the conversations which had been carried on be- 
tween the General Staffs of the two Armies for some 
years. Foch, then but little known in England, had 
been present in London at some of these confer- 
ences, where his influence permeated the discussions 
of the principal Staff Officers of the War Office. 
He also acquired even great influence over the mind 
of the Grand Duke Nicholas of Russia and had 
planned with him the opening moves of a defensive 
war on the Eastern battle front. . . . The Ger- 
man invasion of Belgium, although it made no vital 
difference to the resolve already taken by Asquith 
and Grey, preserved the unity of the nation, if not 
the integrity of the government." 

THE ANGLO-RUSSIAN UNDER- 
STANDING 

None of the entanglements woven in Europe dur- 
ing the years preceding the Great War proved to 
be more fateful than those uniting Russia and Eng- 



ENGLISH UNDERSTANDINGS 35 

land. None of them was more secret. None of 
them seemed so unnatural. Nowhere in Europe did 
the Tsar's autocratic government receive such exe- 
crations as in London and nowhere were the exiles 
from his terrible wrath more cordially welcomed. 
There was of course a general rejoicing in 1907 
when it was announced that England and Russia, 
historic enemies, had signed a treaty disposing of 
their quarrels in Southern Asia and delimiting their 
spheres of influence in Persia. Liberals, devoted 
to peace, retrenchment, and reform, could not do 
otherwise than approve. People of pacific tenden- 
cies and delusions hailed the treaty as new proof 
that the peaceful settlement of disputes was taking 
the place of the cruel arbitrament of war. Sea- 
soned diplomats in London, Paris, Berlin, and St. 
Petersburg, however, knew that the treaty had an 
entirely different meaning and bearing. 

Between 1907 and 19 14 Anglo-Russian friend- 
ship was made manifest by the usual exchange of 
visits and speeches of felicitation on ceremonial oc- 
casions. Still it was not believed in England, out- 
side of the government group at least, that any 
commitments had been made. Indeed the hatred 
of English Liberals for autocratic Russia was so 
marked that intelligent observers did not dream 
that the English government would favor Russia 
rather than Germany in the ordinary course of 
events. In the spring of 19 14, however, persistent 
rumors were afloat to the effect that some kind of an 
understanding or alliance had been concluded with 
Russia involving commitments of a military charac- 



36 CROSS CURRENTS IN EUROPE TO-DAY 

ter. These rumors seemed so well authenticated that 
direct questions were put to Sir Edward Grey in the 
House of Commons. With diplomatic correctness, 
Sir Edward replied cautiously that "there were no 
unpublished agreements with European powers apt 
to restrain or hamper the free decision of the Gov- 
ernment or Parliament as to whether England was 
to participate in a war or not." This was, in a 
formal sense of the word, accurate, but, of course, 
it meant one thing to Sir Edward and quite another 
thing to the minds of people who knew nothing about 
the diplomatic operations of the British govern- 
ment during the previous ten or fifteen years. Such 
was the state of public knowledge in England on 
the very eve of the mighty cataclysm. 

Although the English government has not seen 
fit to publish any documents on Russian relations 
similar to those issued by the French government in 
the Yellow Book of 19 18, a great deal of light has 
been thrown upon Anglo-Russian relations by the 
new materials made public from the Belgian and 
Russian archives. In these it is possible to trace 
with a certain degree of accuracy the policies and 
understandings of Russia and England between 
1906 and 1914. In the documents of the first group 
we have the expert opinions of Belgian diplomats 
stationed in Berlin, Paris, and London as to the 
nature and significance of the new entente. These 
papers are, of course, neither Russian nor English, 
but they give us the sober and official judgment of 
informed neutrals. They show how persons accus- 
tomed to deal with affairs of state looked upon the 



ENGLISH UNDERSTANDINGS 37 

new understanding. They are in part founded upon 
rumor, but rather authentic rumor. 

The first among them is a letter of May 7, 1906, 
from the Belgian ambassador at Paris, which throws 
light upon the events that led up to the Anglo- 
Russian treaty of 1907. It reads: "The king of 
England left Paris to-day a'fter having spent five 
days here. . . . Some are pleased to ascribe to the 
presence of the king of England in Paris another ob- 
ject and there is reason for believing that he wishes 
by the mediation of France to bring about a seri- 
ous rapprochement between Great Britain and 
Russia. That new triple arrangement, fortified by 
the Anglo-Japanese Alliance and by the friendship 
which Italy shows more and more for France and 
England, is already viewed, by those who love to 
prophesy, as an event soon to be realized and one 
which will assure for a new and long period the peace 
of Europe because Germany, in spite of the bad 
spirit which she may feel, cannot oppose effectively 
the current of ideas which now move toward that 
new political combination. If it is regarded as a 
certain pledge of peace by some, it is viewed by 
others as such an evident manifestation of the de- 
sire to isolate. Germany that she cannot fail to 
search for all possible means with which to break 
the iron circle drawn about her." 

The second document is from the Belgian ambas- 
sador at Berlin and bears the date of June 8, 1906. 
It reflects the diplomatic rumors and beliefs of the 
German capital and gives an impression of the opin- 



38 CROSS CURRENTS IN EUROPE TO-DAY 

ion current at that strategic centre. The language of 
the paper runs as follows: "In spite of the friendly 
discourses of English statesmen, the visit of the 
German mayors, and the correctness of official re- 
lations, the attitude of the British government does 
not appear to have changed since the advent of 
the Liberal ministry. Sir Edward Grey assures 
the public that there is no arrangement between 
England and Russia, but evidently a rapprochement 
is being prepared, and is already half accomplished. 
Otherwise what would be the significance of the an- 
nouncement of the visits of the English and Russian 
fleets? Is it on account of the soundness of Russian 
credit that the English market, hitherto closed 
to Russian loans, has just been opened? What 
can England hope or fear from a country paralysed 
by long years of military disaster and by a revolu- 
tion the outcome of which cannot be foreseen? As 
has been said with reason the dominant thought of 
the English statesmen favorable to a rapprochement 
with Russia seems to be to complete and to maintain 
the isolation of Germany." 1 

As to the early operations of the Anglo-Russian 
entente, which grew out of the treaty of 1907, the 

1 An economic background is given in this extract from a letter 
written by the Belgian ambassador in London on April 28, 1906: 
"The English portion of the Russian loan has been covered in 
London without difficulty by the aid of the house of Baring 
Brothers. It is learned from a well-informed source that the 
minister of foreign affairs, semi-officially, has urged high finance 
in the capital to sustain the loan for a political object with a view 
to improving relations with Russlia. The Anglo-Russian en-> 
tente is in the air. There is talk of mutual assurances to be 
exchanged between London and St. Petersburg." 



ENGLISH UNDERSTANDINGS 39 

documents published from the Russian archives do 
little more than illustrate what was well known 
in 19 14. A note written by the Russian ambassador 
in London on January 28, 1909, while the Bos- 
nian crisis was distracting Europe, contains a state- 
ment that Sir Edward Grey "has declared to Cam- 
bon that he wishes to inform the French govern- 
ment that the London cabinet has promised the 
Russian government its diplomatic support in the 
question of the compensation of Serbia and Monte- 
negro. Grey tells me that he has taken this step in 
order to clear the situation of every misunderstand- 
ing. . . . The Serbian demand's must be limited 
as much as possible in the interests of peace." 

Supplementing this note are important docu- 
ments which show how Russian diplomats looked 
upon the Balkan problem and especially the stroke 
of Austria-Hungary in annexing Bosnia and Herze- 
govina. Minutes of the grand civil-military con- 
ferences in St. Petersburg from 1908 onward prove 
that nothing but the low state of Russian military 
forces after the Japanese war prevented the Tsar's 
foreign office from adopting an intransigent Balkan 
policy at once. English support had already been 
offered in that connection. As weakness compelled 
Russia to accept, with a wry face, the outcome of 
the Austrian maneuver in the autumn of 1908, her 
diplomats decided that better preparations should 
be made for future exigencies. On April 1, 1909, 
the Russian ambassador in Paris wrote home : 
"German and Austrian journals have emphasized 
the success of Austrian diplomacy and the predomi- 



40 CROSS CURRENTS IN EUROPE TO-DAY 

nant position of the Dual Monarchy in the Balkans. 
In consequence of this, public opinion, in France as 
well as in England, demands more and more a 
greater rapprochement between Russia, France, and 
England as they have already acted in common 
during the Austro-Serbian conflict. Foreseeing the 
further development of the JEuropean situation, 
many newspapers come to the conclusion that pre- 
cisely as Germany and Austria have now achieved 
a brilliant victory, so must the two Western powers, 
together with Russia, now pay their attention to 
the systematic development of their forces in order 
to be able, once they are in a position not to fear 
a challenge of the Triple Alliance — and in this case 
Italy would separate herself from the Triple Alliance 
— to set up on their part demands that would re- 
store the political balance which has now been dis- 
placed in favour of Germany and Austria. The ex- 
perience of the last five years has shown that a policy 
of this sort need not necessarily lead to war." 

In suggesting a closer agreement with England, 
the same ambassador gave cogent reasons of a 
practical kind for such a program. In a report 
of the same date as the above note he said: "The 
movement of the Central European states towards 
the Mediterranean is contrary not only to our 
own intentions but also to the interests of our allies 
and friends, the French and the English. The latter 
are particularly concerned with protecting the road 
from the Suez Canal to India and deem it necessary 
to oppose every effort to interfere with this route. 
... In view of Germany's position at Constanti- 



ENGLISH UNDERSTANDINGS 41 

nople, the presence of the German fleet in the 
Mediterranean would be just as dangerous to Rus- 
sia as was the predominant position which Eng- 
land occupied in Turkey, until the agreement which 
you have concluded with London eliminated the 
causes of possible conflicts between Russia and Eng- 
land. All these circumstances show how necessary 
it is for us to bind ourselves still more closely to 
France and England in order to oppose in common 
the further penetration of Germany and Austria 
into the Balkans." 

The policy outlined in these notes expressed very 
precisely the opinions cherished in Russian Imperial 
circles. While huge sums of money were borrowed 
in England and France for the reconstruction of 
the Russian army and navy, diplomats redoubled 
their efforts to seal more firmly Anglo-Russian 
friendship. In 1912, the year that M. Poincare 
was installed as prime minister at Paris and M. 
Isvolski began his remarkable negotiations with the 
French premier, another Russian diplomat, M. Sa- 
zonov, undertook a delicate mission to England to 
discover the temper and opinion of the English 
government. The results of his inquiries he re- 
ported to his home government with full knowledge 
that they would be the basis of serious and momen- 
tous steps in St. Petersburg. In one of these reports 
to the Tsar, M. Sazonov thus sums up his findings 
in England: 

"As a general indication of the feeling respecting 
Russia which I have observed in England, I must 
mention that the leader of the opposition, Mr. Bo- 



42 CROSS CURRENTS IN EUROPE TO-DAY 

nar Law, was also a guest at Balmoral for several 
days at the same time as myself. I expressed to 
him, amongst other things, my satisfaction at the 
speech he had recently made in the name of the op- 
position in the House of Commons in which he ap- 
proved of Sir Edward Grey's policy in the sense 
of a closer approach to Russia. In the presence of 
Grey, Bonar Law confirmed the words mentioned 
and in fact stated that this was the only question 
upon which there existed no difference of opinion 
between the Conservatives and the Liberals in 
England. 

"Making use of the favorable circumstances, I 
thought it advantageous during one of my conver- 
sations with Grey to acquire information as to 
what we might expect from England in case of an 
armed conflict with Germany. The statements 
which I myself thereupon heard from the responsi- 
ble leader of the English foreign policy as well as 
afterwards from the lips of King George himself 
appear to me to be worthy of notice. 

"Your Imperial Majesty is aware that Poincare 
during his visit to Petersburg last summer expressed 
to me the wish that I should ascertain the extent to 
which we could depend upon the assistance of the 
English fleet in case of such a war. 

"After I had confidentially initiated Grey into 
the contents of our naval agreement with France 
and pointed out the fact that according to this 
settled compact, the French fleet would be con- 
cerned with the safeguarding of our interests in 
the southern scene of war in that it would prevent 



ENGLISH UNDERSTANDINGS 43 

the Austrian fleet from breaking through into the 
Black. Sea, I asked the Secretary of State whether 
England on its part could not render us a similar 
service in the north, by diverting the German squad- 
ron from our coast in the Baltic. 

"Without hesitating, Grey stated that should the 
conditions under discussion arise, England would I 
stake everything in order to effect the most seri- 
ous blow to German power. . . . 

"Arising out of this, Grey, upon his own initia- 
tive confirmed, what I already knew from Poincare, 
namely, the existence of an agreement between 
France and Great Britain, according to which Eng- 
land engaged herself, in case of war with Germany, 
not only to come to the assistance of France on 
the sea, but also on the continent by landing troops. 

"The king who touched upon the same question 
during one of his conversations with me, expressed 
himself still more decidedly than his minister. 
With visible emotion, His Majesty mentioned Ger- 
many's aspirations toward naval equality with 
Great Britain and exclaimed that in case of a con- 
flict it would have disastrous consequences not only 
for the German fleet but also for German com- 
merce as the English 'would sink every single Ger- 
man merchant ship they got hold of.' 

"The last words probably not only reflect the 
personal feelings of His Majesty but also the pre- 
vailing mood in England with regard to Germany." 

Delighted with this report on the state of affairs 
in England, Russian and French diplomats, as the 
great crisis approached, set systematically about 



44 CROSS CURRENTS IN EUROPE TO-DAY 

the task of turning the understanding between 
Russia and England into something like a fighting 
agreement. Hearing of an impending visit of King 
George V and Sir Edward Grey to Paris in April 
19 14, the Russian foreign office suggested to the 
French government that the latter take advantage 
of the occasion to propose a naval understanding 
between England and Russia, one similar to that ex- 
isting between France and England. The design 
worked to perfection, for the architects of the 
enterprise found Sir Edward Grey quite prepared 
to entertain the proposition and to enter heartily 
into the arrangement. A letter written home by 
the Russian ambassador in Paris on April 29, 19 14, 
gives a full account of the transaction from the in- 
side: 

"The exchange of opinion between the English 
and the French statesmen dealt above all with the re- 
lation between England and France. Before 
entering into the exchange of opinions it was 
recognized by both parties that the existing 
agreements between the two countries required 
no kind of formal modification or supplement 
and that France and England by continuing a 
consistent and loyal practice of the so-called 'en- 
tente cordiale' in all political questions that might 
arise, would strengthen and develop the bonds unit- 
ing them from day to day. Thereby it was also 
acknowledged that Russia entered in the closest 
manner into the union between England and France 
as to their joint policy. This thought has been 
very clearly expressed in the press notice published 



ENGLISH UNDERSTANDINGS 45 

here and in London after the above mentioned con- 
ference. M. Doumergue told me that each word 
of this notice, which was edited by M. Cambon, had 
been carefully considered and revised not only by 
himself but in fact also by Sir Edward Grey who 
had completely approved of the mention of Russia 
contained in the notice, as well as the reference to 
the fact that the aim of the three powers was not 
only the maintenance of 'peace,' but also, of the 
'balance of power.' 1 

"After the conclusion of the discussion on dif- 
ferent questions of the current policy that were on 
the program, M. Doumergue proceeded to the ques- 
tion of the relations between Russia and France and 
laid before Sir Edward the plans he and I had 
agreed upon. He particularly referred to two 
arguments in favor of a closer Anglo-Russian 
agreement: (1) The efforts of Germany to 
divert us from a triple agreement as being merely 
an insecure and weak political combination, and 
(2) the possibility of freeing a part of the English 
naval forces for energetic action not only in the 
Baltic and North Sea, but also in the Mediter- 
ranean. ( M. Doumergue pointed out, among other 
things, to Sir Edward that we would have a power- 
ful Baltic squadron of dreadnoughts in two years.) 

"Sir Edward replied to M. Doumergue that he 
personally completely sympathized with the thoughts 
which had been expressed to him and that he was 
quite prepared to conclude an agreement with 
Russia similar to the one that existed between Eng- 

1 See above, p. 18, in connection with the Russo-French alliance. 



46 CROSS CURRENTS IN EUROPE TO-DAY 

land and France. He did not conceal from M. 
Doumergue, however, that not only among the gov- 
ernment parties but also among the members of the 
cabinet, elements were present that were prejudiced 
against Russia and that were little inclined toward a 
closer approach to that power. He expressed hope, 
however, that he would succeed in inclining Mr. 
Asquith and other members of the cabinet to his 
standpoint and suggested the following modus pro- 
cedendi : In the first place the cabinets both in Lon- 
don and Paris after mutual agreement could inform 
the St. Petersburg cabinet of the agreement exist- 
ing between France and England as follows : ( i ) 
The military and naval convention worked out by 
the General and Naval staffs, which as you are al- 
ready aware, has, so to speak, a conditional char- 
acter, and (2) the political agreement which is 
formally sealed by the letters exchanged between 
Sir Edward Grey and the French ambassador; it 
is stated in these letters that in case England and 
France decide upon a joint active step, according to 
the course of events, the above mentioned conven- 
tions 'would be taken into account.' Simultane- 
ously with giving this information, the cabinets in 
London and Paris could ask us what our attitude 
was toward the proposal relative to this action, 
which in turn could give us occasion to enter into 
an interchange of ideas with England concerning 
the settlement of a corresponding Anglo-Russian 
agreement. In the opinion of Sir Edward Grey 
only a naval and no military convention could be 
drawn up between us and England as the land forces 



ENGLISH UNDERSTANDINGS 47 

of England are allotted in advance and obviously 
could not operate conjointly with Russian military 
forces. Sir Edward Grey added that immediately 
upon his return to London he would place the above 
represented plan of action before Mr. Asquith and 
his other colleagues for their judgment. . . . 

"All three of those present at the conference, 
MM. Doumergue, Cambon, and de Margerie told 
me that they were astonished at the clearly stated 
and definite readiness to enter upon a closer ap- 
proach to Russia, which Sir Edward Grey had ex- 
pressed. According to their conviction, the reser- 
vations made by him concerning Mr. Asquith and 
the other members of the cabinet have a purely for- 
mal character and had he not been convinced 
in advance of their agreement he would have ab- 
stained from making such concrete suggestions." 

On the same day, the Russian ambassador in Lon- 
don wrote to St. Petersburg that Sir Edward Grey 
had secured the assent of the prime minister, Mr. 
Asquith, and a few days later added that the con- 
sent of the English cabinet had been obtained. 
Thereupon followed the naval conversations as ar- 
ranged between the Russian and English naval 
staffs. The understandings existing between Eng- 
land and France were made known to the Russians 
and a program of cooperation among the three 
powers on the sea, in case of a common war against 
Germany, was worked out in the closest secrecy. 
This adjustment was made during- the months of 
May and June, 19 14. 

Sir Edward Grey was not prepared to make an 



48 CROSS CURRENTS IN EUROPE TO-DAY 

alliance but he pointed out that no alliance existed 
with France. The Russians accepted this situation, 
as inevitable. On May 18, while the conversations 
were being formulated, the Russian ambassador in 
London wrote to his government that "even a most 
careful but public alliance would meet with strong 
and undisguised opposition in England and that not 
only on the part of the Liberal Party, and a great 
part of the political effect intended would be frus- 
trated by it. I believe that under such circum- 
stances an alliance would not be worth much. It 
would merely in a very slight degree increase the 
guarantees which are offered to France and Russia 
by England and it would on the other hand offer a 
far more fertile soil for agitation in favour of Ger- 
many. . . . Even those Englishmen who are firmly 
convinced that sooner or later a conflict with Ger- 
many will prove inevitable would be frightened by 
the idea of binding England by means of decisive 
treaties of alliance which would impose obligations 
upon her, the conditions and consequences of which 
cannot be as yet foreseen." 

In spite of the secrecy that shrouded the negotia- 
tions and the naval conversations, German news- 
papers, perhaps through the secret service, got hold 
of the story and published a^flaming account of this 
new proof of the encircling policy of the Entente. 
The Russian government flatly denied the allega- 
tion and informed the German ambassador at St. 
Petersburg that there was nothing in it. Accord- 
ing to the notes of the Russian ambassador in Lon- 
don, Sir Edward Grey was "greatly alarmed by the 



ENGLISH UNDERSTANDINGS 49 

false rumors which were circulating in the German 
press concerning the contents of the alleged Naval 
Convention between England and Russia in connec- 
tion with the question of the Straits." Sir Edward 
assured the German ambassador in London that the 
matter of the Straits had not been discussed by the 
two powers in five years and also assured him "that 
between England on the one hand and France and 
Russia there existed neither an alliance nor a con- 
vention." He frankly added that there was a great 
intimacy among the three powers and said that they 
had come to an understanding on all questions just 
as if they were allies. 

As the leak made such a noise in Europe, Sir 
Edward Grey could not escape the necessity of 
facing the issue in the House of Commons. In 
June, 19 14, he was asked point blank whether "any 
naval agreement has been recently entered into be- 
tween Russia and Great Britain; and whether any 
negotiations with a view to a naval agreement have 
recently taken place or are now pending between 
Russia and Great Britain?" To this question Sir 
Edward replied, with great circumspection, that a 
similar question had been asked a year before and 
that the Prime Minister had then answered that 
there were no unpublished agreements "which would 
restrict or hamper the freedom of the Government 
or of Parliament to decide whether or not Great 
Britain should participate in a war. That answer 
covers both the questions on the paper. It remains 
as true to-day as it was a year ago." 

The character of this reply, ingenious and care- 



50 CROSS CURRENTS IN EUROPE T*0-DAY 

ful, has been the subject of much discussion. Its 
technical and diplomatic correctness has been ad- 
mitted but it has been suggested that, owing to the 
formula used by Sir Edward, his statement was 
susceptible of a double interpretation and that, to 
gentlemen who did not possess his exact informa- 
tion, it did not convey the same meaning as it did 
to its author. This, however, is a problem in ethics 
and casuistry. At all events as the Russian ambas- 
sador in London wrote home sometime later, Sir 
Edward would "find it difficult to issue a denial and 
go on negotiating at the same time — a role which he 
would be obliged to play towards Germany as well 
as towards a considerable portion of his own party 
and the English press." The situation was indeed 
delicate and embarrassing, but Anglo-Russian naval 
preparations were not halted by the disturbances 
among the statesmen and politicians. 1 When the 
war came a few weeks later all the two powers had 
to do was to order the execution of plans already 
prepared. 

BELGIAN PAPERS AND PREPARA- 
TIONS FOR LANDING ENGLISH 
TROOPS ON THE CONTINENT 

After their occupation of Belgium, the Germans 
searched the archives of that country and made 
public many volumes of valuable papers. One set 
of five volumes, composed of reports from Belgian 
representatives stationed at various capitals, makes 

1 For light on this subject from the German archives, see 
p. 72. 



ENGLISH UNDERSTANDINGS 51 

available a mass of secret and informed opinion 
relative to the policies and measures of the leading 
governments of Europe for many years previous to 
the great war. Another group of Belgian papers 
bears upon alleged negotiations between Belgium 
and England with respect to the landing of English 
troops on the continent in the eventuality of a war. 
The German interpretation of these papers, par- 
ticularly the second group, has been vigorously at- 
tacked, but their authenticity apparently has never 
been officially denied. Indeed their authenticity is 
implicitly admitted by M. van den Heuvel, the Bel- 
gian minister of state, who in speaking of them 
declares that the papers show clearly that Belgium 
had no convention or treaty with England, and that 
she had "taken the most scrupulous care to recon- 
cile the precautions exacted by the necessity of safe- 
guarding the independence and maintaining the 
honor of the country with the duties of the strictest 
neutrality." 

The first of these important documents, published 
in fac simile in the Norddeatsche Allgemeine Zeit- 
ung on November 25, 19 14, was a letter from the 
Belgian chief of staff to the Belgian minister of war 
respecting his "confidential interviews" with the 
English military attache at Brussels and with a 
member of the General Staff of the English War 
Office. These conversations dealt with the proposed 
disposition of English forces on the Continent in 
case of a war with Germany. With the details of 
the arrangements we are not here concerned. The 
point of note is that the English representative in- 



52 CROSS CURRENTS IN EUROPE TO-DAY 

sisted on the following: "(i) Our conversation 
was absolutely confidential; (2) it was in no way 
binding on his government; (3) his Minister, the 
British General Staff, he, and myself were the only 
persons then aware of the matter; (4) he did not 
know whether his Sovereign had been consulted." 
This was in 1906. 

In another one of the documents, dated April 24, 
19 1 2, a conversation between the British military 
attache and the Belgian general, Jungbluth, is re- 
corded: "The British government, at the time of 
recent events, would have immediately landed 
troops on our teritory even if we had not asked for 
help. The general protested that our consent 
would be necessary for this. The military attache 
answered that he knew that but that, as we were not 
in a position to prevent the Germans passing 
through our territory, Great Britain would have 
landed her troops in any event." 

On the basis of these documents, the Germans ac- 
cused Belgium of perfidy, declared that there had 
been a convention or agreement between England 
and Belgium against Germany, and alleged that 
England and France would have violated Belgian 
neutrality if Germany had not done it. These ex- 
travagant charges were not at all warranted by the 
documents; and the English government flatly de- 
nied that any such agreement with Belgian had ever 
existed. 

The English government did not however deny 
that "conversations" had taken place with Belgian 
military authorities. It said: "In view of the 



ENGLISH UNDERSTANDINGS 53 

solemn guarantee given by Great Britain to pro- 
tect the neutrality of Belgium against violation 
from any side, some academic discussions may, 
through the instrumentality of Colonel Barnardis- 
ton, have taken place between General Grierson 
(now dead) and the Belgian military authorities 
as to what assistance the British army might be able 
to afford Belgium should one of her neighbors vio- 
late that neutrality. Some notes with reference to 
the subject may exist in the archives at Brussels. 
It should be noted that the date mentioned, namely, 
1906, was the year following that in which Ger- 
many, as in 191 1, adopted a threatening attitude 
towards France with regard to Morocco, and in 
view of the apprehensions existing of an attack on 
France through Belgium it was natural that pos- 
sible eventualities should be discussed." 

It may seem rather strange to those unaccus- 
tomed to the cautious restraints of English di- 
plomacy that the English government should have 
been officially unaware of the "conversations" in 
question. From the point of view of English prac- 
tice, there was nothing unusual about the matter. 
The government at London frankly confessed that 
such interviews "may have taken place" and that 
they were perfectly "natural" in view of possible 
eventualities. We are constrained to believe the 
English declaration that there had been no formal 
agreement and that such interviews as may have 
occurred were quite "natural." We should also 
take note of the fact that Lord Haldane in 19 14 
officially denied the German allegations and said: 



54 CROSS CURRENTS IN EUROPE TO-DAY 

"We had never committed ourselves at all to the 
sending of troops to the continent, and had never 
contemplated the possibility of sending troops to 
Belgium to attack Germany." Perhaps his Lord- 
ship was a bit too emphatic and sweeping when he 
added: "We never thought of sending troops to 
Belgium until Germany had invaded it and Belgium 
had appealed for assistance to maintain the inter- 
national treaty." Possibly the contingency had 
been "thought of," at least unofficially, while at the 
same time the English government retained a free 
hand. Certainly the landing of troops in France 
had been carefully arranged. 

After the war was over, Lord Haldane 
explained, with considerable and pardonable pride, 
how as minister of war from 1905 to 19 12 he had 
reorganized the department and prepared for 
"eventualities" on the continent. This was done 
on the occasion of the coal inquiry. We may quote 
the questions of the Chairman and the answers of 
Lord Haldane from the minutes of the commission: 

"Chairman. Am I right in thinking that during 
that time you organized the territorial forces of 
the crown and that also you provided for a speedy 
mobilization of our forces in the event of the na- 
tion being called upon to go to war? [Lord Hal- 
dane.] That is so. 

"I think, as a result of your efforts, a very 
speedy mobilization of our forces was effected when 
war was declared against Germany? — Yes. The 
thing we concentrated upon was extreme rapidity of 



ENGLISH UNDERSTANDINGS 55 

mobilization and concentration in the place of as- 
sembly, and that we carried out. 

"I suppose it is no longer a secret, but war was 
declared on Tuesday, August 4th, 19 14 and I think 
within a matter of twelve or fourteen hours, under 
the scheme of mobilization which you had prepared, 
some of our troops were already in France*? — Yes, 
within a very short time; within a very few hours 
troops were in France. 

"How long was it before the whole of the 
British Expeditionary Force was placed in the field 
at the appointed place? — On Monday, August 3rd, 
19 14, at the request of the Prime Minister, I, as 
Lord Chancellor, went back to the War Office and 
mobilized the machine with which I was familiar. 
That was done at 1 1 o'clock upon Monday, August 
3rd, and the giving of the orders took only a few 
minutes; everything was prepared years before." 



Ill 

DIPLOMATIC REVELATIONS: THE 
CENTRAL POWERS 

ON the other side of the grand line-up of 19 14 
stood the embattled Central Powers, with 
Italy an uncertain factor in the background. It was 
known that Germany and Austria-Hungary as early 
as 1879 had entered upon a close alliance. It was 
also a matter of public record that the Triple 
Alliance had been formed three years later between 
Germany, Italy, and Austria-Hungary and had been 
renewed from time to time. When however, in 
19 1 6, a professional student of history, Professor 
C. J. H. Hayes, came to write on the Triple Alli- 
ance he could only say of the treaties which formed 
that association: "Their terms have never been pub- 
lished in full, but it is safe to say that they were 
defensive in character, each party promising the 
others military assistance against attacks by outside 
powers, that they were mainly directed against fears 
of French and Russian aggression, and that they 
were binding for a term of years." Critical pub- 
licists among the Entente powers, however, re- 
garded the Triple Alliance as a mere cloak to cover 
Teutonic aggression in Central and Southeastern 
Europe, and a grand design for colonial and com- 

56 



THE CENTRAL POWERS 57 

mercial aggression beyond the seas. Such criti- 
cisms were warmly resented by the Germans whose 
spokesmen insisted upon their pacific intentions. 
Von Buelow, for example, declared that the Triple 
Alliance was "an insurance company, not a com- 
pany for profit." The veil of secrecy, if not com- 
pletely removed, has at last been rent, and we can 
read for ourselves the terms of the long discussed 
documents. 

DISCLOSURES FROM THE 
AUSTRIAN ARCHIVES 

From the Austrian archives have come two sets of 
important papers. The first embraces the secret 
treaties of Austria-Hungary from 1879 to 19 14. 
This has been published with English translations 
as well as the originals, so that American students 
will have no difficulty in tracing the course of many 
important international relations which were hid- 
den from public view before 1920. The second 
group of Austrian documents relates to the negotia- 
tions which took place during the weeks immediately 
preceding the outbreak of the Great War. These 
papers supplement and enlarge upon the materials 
which the Austro-Hungarian government laid be- 
fore the public in 19 14 as records justifying its poli- 
cies and measures. Through these papers, our 
knowledge of the background of the war is im- 
mensely enriched. In them we can trace more 
clearly than ever the mighty forces that steadily 
converged through the years until they met in deadly 
collision in August, 19 14. These documents also 



J 



58 CROSS CURRENTS IN EUROPE TO-DAY 

give us a better perspective. They remove many 
uncertainties. Above all do they give us an insight 
into the foreign policies of the Italian government 
and link up the entrance of Italy into the war with 
the policies which preceded that action. 

Students of international relations, as intimated 
above, have known for years that an alliance had 
been formed between Austria-Hungary and Germany 
in 1879 and renewed from time to time. They 
have also known that a Triple Alliance between 
Germany, Italy, and Austria-Hungary had been es- 
tablished in 1882 and extended from time to time 
on the basis of new negotiations. These compacts 
were often referred to in veiled language by states- 
men and debated with fervor by members of the 
various European parliaments, but the high con- 
tracting parties did not divulge the complete and 
precise terms of their agreements. "Thus," as 
Professor Pribram says, "it came about that on the 
disruption of the Triple Alliance by Italy in 19 15, 
no one had an accurate knowledge of the tenor of 
the treaties, aside from the surviving statesmen and 
diplomats who had participated in framing and exe- 
cuting them: certainly an honorable testimony to 
the discretion of a class against which the reproach 
of indiscretion has so often, and not unjustly, been 
made." After Italy cast off the Triple Alliance, 
Austria-Hungary made public certain articles of the 
Triple compact but kept complete silence as to the 
remaining clauses. This was the state of affairs in 
19 18 when the revolution in Austria threw open 
the imperial archives. Although students will give 



THE CENTRAL POWERS 59 

thanks for the papers now laid before them for ex- 
amination, they cannot forget that the whole story 
is not yet available. The archives of Italy and 
Germany have not yet yielded their secrets bearing 
upon the Triple Alliance. Italy has kept silent. 
Germany has concentrated her efforts on exposing 
the documents relative to the outbreak of the War. 
Yet the bold outline of the Triple Alliance stands 
clear and firm,. 

First among these new papers are the text of the 
treaty of 1879 between Germany and Austria-Hun- 
gary and certain accompanying documents. The 
text of the treaty confirms the assertion always made 
by German statesmen to the effect that it was 
"purely defensive" in character. Indeed the con- 
tracting parties state that while solemnly promis- 
ing each other never to allow their purely defensive 
agreement to develop an aggressive tendency, they 
have determined to conclude an alliance of peace 
and mutual defense. They agree to assist each 
other in case either is attacked by Russia. If any 
other power attacks either of them, the other 
promises not to support the aggressor but to ob- 
serve an attitude of benevolent neutrality. In case, 
however, Russia enters into the conflict precipitated 
by another power, both of the high contracting 
parties are to support each other with all available 
strength and to wage war together until the conclu- 
sion of a common peace. They express the hope 
that Russian armaments may not be menacing to 
them but should this hope prove illusory they 
"would consider it their loyal obligation to let the 



60 CROSS CURRENTS IN EUROPE TO-DAY 

Tsar Alexander know, at least confidentially, that 
they must consider an attack on either of them as 
directed against both." It is clear from this docu- 
ment signed just after the check administered to 
Russia at the Berlin congress of 1878, that Austria- 
Hungary and Germany looked upon Russia as the 
potential disturber of European peace, but at the 
same time felt it necessary to reckon with the pos- 
sibility of an attack from other quarters. It is 
also clear that the document, on its face, like the 
Franco-Russian Alliance of 1891, bears no trace of 
aggressive purposes. 

The Triple Alliance concluded in 1882, which 
supplemented, but did not supersede the alliance 
between Austria-Hungary and Germany, was also 
in its first form a defensive arrangement. The high 
contracting parties mutually promise peace and 
friendship and agree to enter into no alliance or 
engagement directed against any one of them. In 
case France makes an unprovoked attack on Italy, 
the Central Powers pledge their aid; the same ob- 
ligation devolves upon Italy in case Germany, with- 
out provocation- on her part, is attacked by France. 
These specifications are followed by general pro- 
visions. If any one or two of the parties, with- 
out direct provocation on their part, should be at- 
tacked by two or more outside powers, the "casus 
foederis" will arise simultaneously for all the con- 
tracting parties. In case any one of the three finds 
its security threatened by some outside power and 
is forced to make war on that account, the other two 
signatories bind themselves to observe a benevolent 



THE CENTRAL POWERS 6l 

neutrality, each of them reserving the right to make 
a common cause with its ally if thought desirable. 
Such were the essential terms of the famous Triple 
Alliance of 1882. A supplementary note declared 
that the Triple Alliance was not hostile to Eng- 
land. 

The first treaty was on its face a purely defensive 
treaty. When it was renewed in 1887 it was sup- 
plemented by special agreements. One of them, 
concluded between Italy and Austria-Hungary, 
states that, in case it becomes impossible to maintain 
the status quo in the Balkans, along the Ottoman 
coasts, and on the islands of the Adriatic and the 
Aegean, the two parties are to cooperate in the 
division of the territory, on the basis of reciprocal 
compensation. In a far more significant agree- 
ment between Germany and Italy, there are two as- 
tounding articles. The first of them runs: "If 
it were to happen that France should make a move to 
extend her occupation or even her protectorate or 
her sovereignty, under any form whatsoever, in the 
North African territories, whether of the Vilayet 
of Tripoli or of the Moroccan Empire and that in 
consequence thereof Italy, in order to safeguard 
her position in the Mediterranean, should feel that 
she must herself undertake action in the said North 
African territories or even have recourse to ex- 
treme measures in French territory in Europe, the 
state of war which would thereby ensue between 
Italy and France would constitute ipso facto, on 
the demand of Italy and at the common charge of 
the two allies, the 'casus foederis' with all the effects 






62 CROSS CURRENTS IN EUROPE TO-DAY 

foreseen by Articles II and V of the aforesaid 
treaty of May 20, 1882, as if such an eventuality 
were expressly contemplated therein." 

The second of the astounding articles (IV) in 
the treaty between Italy and Germany adds: "If 
the fortunes of war undertaken in common against 
France should lead Italy to seek for territorial guar- 
anties with respect to France for the security of the 
frontiers of the Kingdom and of her maritime posi- 
tion, as well as with a view to the stability of peace, 
Germany will present no obstacle thereto and if 
need be, and in a measure compatible with circum- 
stances, will apply herself to facilitating the means 
of attaining such a purpose." 

In the renewal of 1891, the three treaties were 
consolidated with textual modifications. Italy's 
plans for action in Northern Africa were approved 
and Tunis as well as Tripoli was brought within the 
purview of the Alliance. In the renewal of 1902, 
Austria-Hungary agreed to a declaration giving Italy 
a free hand in Tripoli, and in the last renewal, that 
of 19 1 2, the sovereignty of Italy over Tripoli was 
recognized. While taking care of her territorial 
interests in Africa, Italy also notified the Central 
Powers as early as 1896 that "she could not partici- 
pate in a war in which England and France should 
figure as the joint adversaries of any state included 
in the Triple Alliance." The Central Powers, how- 
ever, refused to accept this declaration on the 
ground that it was incompatible with the terms of 
the treaty itself. 

Professor Pribram, the Austrian editor of the new 



THE CENTRAL POWERS 63 

secret papers, in very restrained language, takes 
Italy to task for turning a treaty for peace and de- 
fense into a treaty supporting* her imperial ambi- 
tions. He shows from the documents how the pre- 
tensions of Italy in every direction — Africa, Al- 
bania, the Balkans and Turkey — rose with the pass- 
ing years and how Germany in her anxiety to keep 
Italy in the Alliance forced Austria-Hungary to 
make ever new concessions to Italian aspirations. 
He states that some Austrian leaders, notably the 
Chief of the Military Staff, opposed constant com- 
pliance with Italian demands and advocated an 
open break involving the settlement of their dis- 
putes by war. Professor Pribram is not sure that 
this would not have precipitated a general war and 
made matters worse, but he is convinced that Italy 
was a disturbing and aggressive factor. The 
papers at present available are used to support this 
conclusion. He obviously feels that Italy cut a 
sorry figure in the negotiations from 1882 to 19 15 
and then assailed her ally in the rear. It is not 
necessary to pass judgment on the merits of this 
opinion. The direction given to the Triple Alliance 
by Italy's demands is, however, indisputable. It 
stands written in the bond. Italy got support from 
Germany and Austria-Hungary for her imperial am- 
bitions in Africa against France, and then after 19 15 
got support from the Allied Powers for her ir- 
redentist and other designs along the Adriatic. 
Students of diplomacy must admit that the Italian 
statesmen during this period rose to the opportuni- 
ties before them and represented the interests of 



64 CROSS CURRENTS IN EUROPE TO-DAY 

their country with a skill seldom equalled in the his- 
tory of international relations. 

The new Austrian papers connected with the im- 
mediate outbreak of the Great War are so volumi- 
nous that it is difficult to summarize them in a brief 
sketch. Though an attempt to do this is hazard- 
ous, still there are certain fundamental matters that 
cannot escape observation. The first is that the 
negotiations carried on by Austria-Hungary during 
the mid-summer of 19 14 were shaped with regard to 
a large general policy and not merely with respect 
to the exigencies immediately at hand. This is 
fully demonstrated by the long memorandum, pre- 
pared with the cooperation of the Minister of For- 
eign Affairs and sent with the personal letter written 
by the Emperor Franz Joseph to the German Em- 
peror on July 2, 19 14. In this highly important 
document it is said: 

"If Russia, supported by France, strives to unite 
the Balkan states against Austria-Hungary, if an/ 
attempt is made to becloud the already disturbed re- 
lations with Rumania, this hostility is not directed 
alone against the Monarchy as such, but in final 
analysis against an Ally of the German Empire — 
against the most accessible part of the European 
bloc which on account of its geographical position 
and internal structure is most exposed to attack 
and bars the way to the realization of Russia's plans 
as a world power. To break the military superi- 
ority of the two Imperial Powers with the aid of 
Balkan troops is the goal of the Dual Alliance, but 



THE CENTRAL POWERS 65 

not the final goal of Russia. While France seeks 
to weaken the Monarchy because she expects from 
that an advancement of her plans for revenge, the 
designs of the Tsar's empire are far more wide 
reaching. 

"If one surveys the development of Russia during 
the last two centuries, the steady extension of her 
territory, and the enormous growth of her popu- 
lation, far exceeding that of the other great Euro- 
pean powers, and if one remembers that this great 
Empire is as good as cut off from the free ocean by 
her position and by treaties, then one understands 
the imminently aggressive character of Russian 
policy. 

"Territorial ambitions at the expense of Germany 
cannot be reasonably ascribed to Russia, but the ex- 
traordinary armaments and warlike preparations, 
the development of strategic railways in the west, 
etc., in Russia are certainly directed more against 
Germany than against Austria-Hungary. For Rus- 
sia has recognized that the realization of her plans 
in Europe and Asia, which spring from internal 
necessity, must injure the most important interests of 
Germany and therefore must incur her unyielding 
opposition. The policy of Russia is determined by 
unchangeable relations and is therefore continuous 
and far seeing. The evident encircling tendencies 
of Russia as against the Monarchy, which involve 
no world policy, have as their final purpose making 
it impossible for the German Empire to withstand 
the ultimate designs of Russia and to resist her po- 
litical and economic supremacy. 



66 CROSS CURRENTS IN EUROPE TO-DAY 

"On these grounds, the directors of the foreign 
policy of Austria-Hungary are convinced that it is 
in the common interest of the Monarchy, no less than 
of Germany, in the present Balkan crisis, to oppose 
seasonably and energetically Russia's development — 
a development that is systematically striven for 
and promoted, — a development which perhaps never 
again can be frustrated." 

Such is the large background to Austro-Hunga- 
rian diplomatic maneuvers. In detail the new secret 
papers show the directors of the Dual Monarchy's 
policy firmly convinced that the murder of the Arch- 
duke was the result of a well-organized Pan-Slav 
plot generated in Belgrade, that weakness in this 
case would not only lower the prestige of the Mon- 
archy but fatally weaken it for future resistance, 
that in a few years the military position of the Cen- 
tral Powers as against Russia and France would be 
materially worse, and that the immediate punishment 
of Serbia was necessary and could be undertaken 
then with more safety than in the years to come. 
"The crime committed against my nephew," wrote 
Franz Joseph to the Kaiser, "is the direct result of 
the Pan-Slav agitation driven by the Russians and 
the Serbs — an agitation which has as its goal the 
weakening of the Triple Alliance and the ruin of my 
Empire. According to all information received up 
to the present the bloody deed in Serajevo was not 
the act of an individual, but the result of a well or- 
ganized plot, the threads of which reach 
Belgrade. . . . You will be convinced by the latest 
terrible events in B,osnia that a removal of the an- 



THE CENTRAL POWERS '67 

tagonism which divides us and Serbia is not to be 
thought of, and that the existing peaceful policy of 
all European monarchs will be in danger as long as 
this mass of criminal agitation goes on in Belgrade 
unpunished." So Austria-Hungary went about 
punishing Serbia, if not with full knowledge of the 
consequences, at least with an understanding that 
fatal things might be set in train. 

It is evident from the new documents, that the 
Austro-Hungarian government set out on its pro- 
gram of positive action with the belief that it would 
have the support of Germany. At a meeting of the 
ministerial council on July 7, 19 14, the presiding of- 
ficer, Count Berchtold, said that conversations in 
Berlin had led to the happy result of assuring to Aus- 
tria-Hungary the unconditional support of Germany, 
with all its energy, in case of a military collision with 
Serbia. It is equally evident that the Austrians 
were fully aware of the fact that their program 
might very well lead to a European war. Berch- 
told said that it was quite probable that an armed 
conflict with Serbia might have as its result a war 
with Russia. It does not appear, however, that 
either the German or Austrian leaders during the 
early stages of the negotiations calculated on the 
active armed intervention of England. The Aus- 
trian ambassador in Berlin wrote to Berchtold on 
July 12. "The German government believes that 
it has convincing evidence that England will not 
take part in a war that breaks out in the Balkans, not 
even if it leads to a conflict with Russia, and even- 
tually France." 



68 CROSS CURRENTS IN EUROPE TO-DAY 

Though aware of the gravity of the situation, 
the Austrians were convinced that sooner or later, 
Russia would have her Balkan combinations com- 
pleted and that they would have to fight for their 
existence whether they liked it or not. Berchtold 
said at the ministerial conference just mentioned 
that "Russia pursues for the present a policy, based 
on a long view of things, which has for its goal the 
union of the Balkan states, including Rumania, in 
order to play them off at the proper moment 
against the Monarchy. He was of the opinion 
that we must reckon with this and that our capacity 
to resist such an operation must steadily grow 
worse, all the more so as an inactive drift in things 
would be interpreted by our South Slavs and Ruma- 
nians as a sign of weakness and would give an 
impetus to the recruiting forces of the two neigh- 
boring states." This position was sustained by the 
Chief of Staff who said bluntly: "From a military 
standpoint he must emphasize the fact that condi- 
tions would be more favorable now for waging war 
than at some future time, as the relative weight of 
forces in the future would run against us." As 
these conclusions are from documents that were not 
intended for the public, it may be assumed that the 
diplomats and military men were speaking the 
truth according to their sincere convictions and not 
creating a fiction for mass consumption. The Cen- 
tral Power's had long been building up their combina- 
tions in the Balkans and had long been operating on 
the assumption that a crisis would inevitably come 



THE CENTRAL POWERS 69 

some day. It seems pretty clear that both of them 
thought the hour had struck on August 1, 19 14. 

One more document may be taken from the price- 
less records of the Austrian archives. The public 
was informed more than once that the Austro-Hun- 
garian government, in waging war on Serbia, had 
no territorial ambitions and was merely eager to 
safeguard its own integrity by punishing the trouble- 
some neighbor. In a general council meeting the 
prime minister of Austria, Stiirgkh, said: "Although 
the seizure of Serbian territory by the Monarchy is 
out of the question, still it is possible to bring 
Serbia into a state of subjection to the Monarchy 
by overthrowing the dynasty, drawing up a military 
convention, and other corresponding measures. 
Also the resolution of the ministerial council did not 
make it impossible to rectify the boundaries in the 
interest of strategic necessity." The minister of 
war thereupon declared that he would vote for the 
resolution on the understanding that certain boun- 
dary rectifications, the occupation of bridgeheads, 
and other similar measures were not excluded. The 
ministry then agreed that at the opening of the war 
on Serbia, an announcement would be made to 
foreign powers to the effect that the Monarchy 
waged no war of conquest and did not contemplate 
annexing the Kingdom of Serbia. 

GERMAN DIPLOMATS AT WORK 

The Austrian revelations are supplemented in 
every detail by the papers from Berlin archives. In 



70 CROSS CURRENTS IN EUROPE TO-DAY 

addition, the latter show, as none of the other col- 
lections do, the high state of nervous tension created 
by the armed peace of Europe. The feverish prep- 
arations of the Russian government were con- 
strued by the German military group as implying 
war in the near future, and it is not surprising to 
find the German documents opening with Russian 
affairs. On June 13, 19 14, the German ambassa- 
dor at St. Petersburg sent home a clipping from a 
leading Russian journal, headed "Russia is ready, 
France must be ready also," and inspired by the 
Tsar's minister of war, General Sukhomlinov. The 
article recited the fact that Russia would soon 
have an army of 2,300,000 men as against Ger- 
many's 880,000 and Austria's 500,000 and in- 
formed France that she must furnish 770,000 
through the extension of her military service to three 
years. 

Along the margins of a German newspaper's 
translation of this article are comments by the 
Kaiser in his own handwriting. He opened by say- 
ing: "This deserves a clear, ringing answer in the 
form of deeds." When the Russian writer speaks 
of Germany's 880,000 men, the Kaiser comments, 
"God be praised!" When the Russian calls atten- 
tion to the network of railways for the quickest 
possible mobilization of troops in case of war, the 
Kaiser exclaims: "All against Germany!" When 
the Russian professes motives of peace for France 
and Russia, the Kaiser cries: "Nonsense!" At 
the conclusion of the whole document, he sums up 
his, judgment: "Well! Finally the Russians 



THE CENTRAL POWERS 71 

have shown their hand. Any person in Germany 
who does not now believe that the Russo-Gauls are 
not working together at high tension for a war with 
us very soon and that we should take corresponding 
counter-measures deserves to be sent to the lunatic 
asylum at Dalldorf." The German newspaper 
which reprinted the Russian manifesto had added 
that "Russia began her colossal armaments two 
years ago in accordance with arrangements with 
France." The Kaiser comments: "What my 
General Staff has steadily asserted." This doc- 
ument was handed back to the Foreign Office on 
June 15, 1 9 14, two weeks before the murder at 
Serajevo. 

The publication in German papers of the Russian 
call to arms created an immense sensation within 
and without official circles. The situation was fully 
described by the Chancellor, Bethmann Hollweg, in 
a letter to Lichnowsky, the ambassador in London, 
on the following day. Speaking of the firebrand 
article from Russia, he said: "The reaction on 
German public opinion ha.s been unmistakable and 
serious. Whereas formerly, it was only the extrem- 
ists among the Pan-Germans and militarists who 
urged that Russia was making systematic prepara- 
tion for a war of aggression upon us very soon, even 
moderate public men are now inclined to this view. 
The next result is a call for another, immediate, 
and extensive strengthening of the army. As a re- 
sult of that, as things stand with us, the competition 
of the navy will be awakened for it is never far be- 
hind when anything is done for the army. I add 



72 CROSS CURRENTS IN EUROPE TO-DAY 

very confidentially that, as His Majesty the Kaiser 
has been drawn into this current of thought, I ap- 
prehend in the summer and autumn an outbreak of 
armament fever here. Although, owing to the 
uncertainty of Russian relations, the actual goal of 
Russian policy can not be forcast with any degree 
of assurance, and although, in our political arrange- 
ments, we must reckon with the fact that Russia, of 
all European powers, is the most inclined to incur 
the risk of a warlike adventure, still I do not believe 
that Russia plans an early war against us. Never- 
theless, she desires — and this cannot be viewed in 
an evil light — she desires to appear at the outbreak 
of the next Balkan crisis protected by extensive mili- 
tary armaments and more powerful than in the last 
Balkan disturbance. Whether it will then come to 
a European conflagration depends entirely upon the 
position of Germany and England. r ' 

At this very moment when the Germans were 
alarmed by Russian sword rattling, they were ex- 
cited over rumors that England and Russia had 
entered into naval conversations, or had drawn up a 
naval convention. The rumors were founded on 
fact, for the English and Russian naval staffs had, 
as we have seen, entered upon such negotiations in 
May, 19 14, but Sir Edward Grey, by a skillfully 
worded denial, had given the. world the impression 
that the rumors were false. In fact the civil branch 
of the German government apparently understood 
Sir Edward's denial to mean that there had been no 
conversations at all whereas he had merely said, 



THE CENTRAL POWERS 73 

rather ingeniously, that nothing had happened to 
bind the hands of the government and parliament 
in case a war was Impending. 

As the Russian government declared the rumors 
utterly unfounded and Sir Edward made a state- 
ment that was susceptible of being construed as a 
denial, the German Chancellor expressed great re- 
lief. He wrote to his ambassador in London : "It 
is thoroughly gratifying to learn that Sir Edward 
Grey has challenged with decision in the lower 
House the rumors of an Anglo-Russian naval con- 
versation and has also allowed his Dementi to be 
emphasized in the Westminster Gazette. Had these 
rumors been confirmed, and in fact only to the effect 
that the English and Russian navies were preparing 
for cooperation in case a common war should be 
fought against Germany — an arrangement similar 
to the agreement which England had made with 
France at the time of the Moroccan crisis — had this 
been true, then not only would Russian and* French 
Chauvinism have been strongly excited, but there 
would have arisen with us a not unjustified distur- 
bance of public opinion which would have found its 
expression in a navy 'scare' and in another poisoning 
of the slowly improving relations with England. In 
view of the nervous tension in which Europe has 
lived during recent years the results would have 
been obvious. At all events the idea of a common 
mission by which England and Germany would 
guarantee peace would be endangered by complica- 
tions arising at any time. 



74 CROSS CURRENTS IN EUROPE TO-DAY 

"I earnestly beg Your Highness to convey to Sir 
Edward Grey my special thanks for his open and 
straightforward declarations and thereupon bring 
to his attention in a prudent and informal way the 
general considerations which I have indicated 
above." 

The German alarm over the news of Anglo-Rus- 
sian naval arrangements, temporarily allayed by Sir 
Edward Grey's public denials and a later denial 
made privately to Lichnowsky, was raised again by 
secret information that came to Berlin from Russia. 
On June 27, after reading one of Lichnowsky's re- 
ports from London, declaring the correctness of Sir 
Edward's position, the Undersecretary of State for 
Foreign Affairs, Herr Zimmerman, wrote to the 
Chancellor: "By this conversation [with Grey] 
Lichnowsky, as was to be expected, has allowed 
himself to be completely bamboozled again by Grey 
and is strengthened anew in the opinion that he has 
to deal with an honorable, truth-loving man. There 
is nothing left to do but to give to Lichnowsky 
some naturally quite prudent hints as to the un- 
doubtedly trustworthy information coming to us 
secretly from St. Petersburg which leaves no ques- 
tion about the existence of continuous political and 
military arrangements between England and France 
and about the already effected negotiations be- 
tween England and Russia leading to identical 
results." 

From the German papers before us, the conclusion 
must inevitably be reached that while the civil wing 
of the German government believed in the peaceful 



THE CENTRAL POWERS 75 

intentions of the members of the Triple Entente, 
the military branch professed to believe that an 
aggressive war was about to be precipitated by Rus- 
sia with the support of France and England and that 
Russia and England were actively engaged in mak- 
ing arrangements similar to those already existing 
between England and France. It is still an open 
question whether Russia did actually contemplate an 
early war on the Central Powers, but it is not to be 
doubted that England and Russia were in fact mak- 
ing arrangements for naval cooperation, in case of 
war, along the lines of the Anglo-French under- 
standing. At all events when the Archduke was 
assassinated at Serajevo, the German Government 
was laboring under considerable excitement. The 
military group was certainly convinced that Russia 
was preparing to execute some plans on the field of 
battle. 

At the exact moment when high tension existed 
in German official circles came the murder of the 
Archduke. Naturally, the Kaiser was very much 
exercised by the news of the affair, and he spurred 
on his subordinates in supporting Austria by vigor- 
ous comments on the margins of the secret papers. 
When Tschirschky, the German ambassador at Ber- 
lin, wrote home that apparently only young men had 
been involved in the crime of Serajevo and only 
milder forms of punishment were therefore possible, 
the Kaiser exclaimed: "Let us hope not." His 
minister had heard that there was going to be a 
thoroughgoing reckoning with Serbia, and he 
added: "Now or never." Tschirschky warned the 



76 CROSS CURRENTS IN EUROPE TO-DAY 

Austrians against hasty action; on this point the 
Kaiser wrote: "Who authorized him to do that? 
That is very stupid. It is not his business, as it 
is entirely Austria's affair to decide what shall be 
done in this matter. . . . Tschirschky should 
please let nonsense alone. The Serbs must be re- 
duced to order and that certainly soon" The Kai- 
ser vigorously objected to treating "murderers" like 
"gentlemen." Counsels of prudence and modera- 
tion he characterized as "imbecility" and "childish." 
He chafed at delays and urged Austria to carry 
out her plan for making demands that Serbia could 
not possibly accept. He declared that "the rascals 
had followed agitation by murder and must be 
humbled." He gave Austria a free hand and his 
unconditional support shortly after the opening of 
the crucial negotiations — unconditional support 
backed by angry and insistent assertions that nothing 
moderate be done. Whether in his blind rage he 
dreamed of all the terrible consequences to follow 
is not apparent, but certainly he was well in- 
formed as to the possibilities of a general con- 
flagration. No one is more responsible than Wil- 
liam II for encouraging Austria to light the 
European fire. 

In the formal official papers the Kaiser does not 
appear as angry and petulant as in his side com- 
ments on documents sent to him for consideration. 
Nevertheless he was zealous in his support of Aus- 
tria in her plans for punishing the Serbs, although he 
seemed a bit cautious at first, as, indeed, were his 



THE CENTRAL POWERS 77 

close official advisers. When the Austrian ambas- 
sador called on him on July 5, 19 14, William II 
said that he had expected serious action on the 
part of Vienna against the Serbs, but that the possi- 
bility of grave complications must be kept in mind 
and that furthermore he would not make a definite 
reply to the request for support until he had con- 
sulted his Imperial Chancellor. After lunch, how- 
ever, the Kaiser appears to have warmed up. He 
told the Austrian ambassador that Austria could 
count upon the full support of Germany. He added 
that while, as he had said, it was necessary for him 
to obtain the opinion of his Chancellor, he had no 
doubt Bethmann Hollweg would approve his posi- 
tion in the matter. The next day the German gov- 
ernment officially informed Vienna that Austria 
must be the judge of what should be done to Serbia 
and that she could count upon the support of her 
ally and friend, Germany. A few days later, in a 
personal letter to the Austrian Emperor, the Kaiser 
reiterated his pledge given % through ministerial 
channels and said: "In these tragic hours you will 
find me and my empire in complete unity on your 
side, true to our old and tested friendship and to 
our obligations as an ally." Perhaps the spirit of 
German diplomacy at this moment is reflected in a 
message written in English for the Kaiser to send 
to the Tsar but withheld for some reason. It ran 
in part: "It is the common interest of you and 
me and in fact of all monarchs that this crime and 
all that are morally responsible for it should re- 



78 CROSS CURRENTS IN EUROPE TO-DAY 

ceive the punishment it deserves. Austria must be 
allowed a free hand to take the evil by the root and 
wipe out the revolutionary movement in Servia, 
which may, by spreading over other countries, one 
day threaten your throne as well as mine. The 
spirit of the people that murdered their own 
king and his wife still governs the country. It 
would be folly and suicidal on our part to do 
anything to spare them the penalty they have 
incurred." 

This position was taken, it seems, with the 
thought that the conflict could be localized, that 
Austria-Hungary could be permitted to thrash the 
Serbs on her own account. It is true that the 
Austrian memorandum, quoted above, showing the 
political philosophy of Vienna in the large, was 
sent to Berlin. It appears among the German docu- 
ments. In spite of this fact, so far as the evidence 
before us goes, the German foreign office was not 
aware of the hidden designs under the Austrian ulti- 
matum and war policy. Neither was that office 
kept fully informed on the various aggressive 
maneuvers executed in Vienna. Taking the offers 
of German support at their face value, the Aus- 
trians assumed that there was no limit to the puni- 
tive measures, they could take. It may be said, 
therefore, that the German government was not a 
party to all the operations in Vienna which pro- 
duced the great calamity. At the same time it 
must be added that the German officials were aware 
that the conflict might not be localized, and they 



THE CENTRAL POWERS 79 

knew that in case it could not be, they would have 
to accept the responsibilities of the Alliance and 
the challenge of war. 

The truth is that the German documents repre- 
sent a confused state of mind in Berlin. Some of 
the officials thought that England and France did 
not want war and that Russia had not yet com- 
pleted her military preparations, at least to such an 
extent that she was ready for war. Others took 
the position that both Russia and England were not 
telling the truth when they denied the rumors afloat 
as to their naval agreements. On one day it was 
thought that German relations with England were 
improving; on the next day they appeared to be 
worse. So the tide of opinion flowed and ebbed. 
Uncertainty reigned in all departments, until at 
length it became clear in Berlin that England would 
not stand aside and wait in case Russia and France 
wei^e drawn into the conflict. That was definite at 
least by July 30. On that day Bethmann Hollweg 
transmitted to Vienna a message from Lichnowsky 
which proposed mediation once more and indicated 
that Sir Edward Grey now took a rather positive 
position. As if in some anguish of spirit the 
Chancellor added: "If Austria rejects this media- 
tion, we shall stand in the presence of a conflagra- 
tion in which England will be against us, Italy and 
Rumania not with us — we two against four great 
powers. Owing to the enmity of England, the 
chief weight of the conflict will fall on Germany. 
Austria's political prestige, the military honor of 



80 CROSS CURRENTS IN EUROPE TO-DAY 

her army, and all her just claims against Serbia 
can be satisfactorily guaranteed by the occupation 
of Belgrade or a few. other places. By the humilia- 
tion of Serbia, Austria would make her position in 
the Balkans and in Russia strong again. Under 
these circumstances we must invite the Vienna Cabi- 
net, in an urgent and emphatic manner, to accept 
the mediation under the honorable conditions 
specified. The responsibility for the results aris- 
ing from contrary action would be exceedingly 
heavy." 

On the day that this letter was written, the con- 
trol of affairs was passing from the hands of the 
civil branch of the German government into the 
hands of the military division. Austria had de- 
clared war on Serbia and was feverishly carrying 
forward her military preparations. By July 29, 
at least, Russia had ordered "partial mobilization." 
Then the Tsar, timid and vacillating, attempted to 
draw back and cancel his own orders. "But," as 
Professor Fay has shown from painstaking re- 
searches, "the Tsar was flatly disobeyed and de- 
ceived by the Russian militarists who thereby ren- 
dered futile the Kaiser's efforts to check Russian 
military measures until he could effect a settlement 
by his mediation at Vienna. On July 30, the Tsar 
was persuaded to approve, 'general mobilization,' 
thereby at last making legal and regular the secret 
military measures which his militarists had disobedi- 
ently been carrying on behind his back." The Ger- 
man military party, when news of Russian mobiliza- 



THE CENTRAL POWERS 8l 

tion was confirmed in Berlin, insisted that Russian 
mobilization meant war and that further diplomatic 
negotiations would only give the Russians tremen- 
dous advantages by enabling them to bring their 
vast horde together before action was started. At 
Vienna and Berlin, events had placed the military 
parties in the saddle. Germany mobilized at once 
and the issue was tried by battle. 

From the facts presented above, certain general 
conclusions seem to emerge. The first and perhaps 
most important is that formal treaties, either secret 
or published, are not necessary to draw nations into 
warlike combinations. This may be done by "con- 
versations," exchanges of diplomatic notes, and un- 
derstandings. Moreover, circumstances, rather 
than the form and language of the understandings, 
determine the outcome. Italy was bound by a 
solemn alliance with Austria and Germany; she de- 
cided that it did not operate, was not binding, did 
not apply; she entered the war against her former 
allies. England had only held "conversations" with 
France; she construed them to be "obligations of 
honor" and fulfilled them. The relations between 
England and Russia were still more tenuous, but 
they proved to be hooks of steel. 

The second conclusion is that all the diplomats of 
Europe were convinced that a general war was in the 
highest degree probable and devoted themselves to 
special alliances and agreements in preparation for 
the terrible eventuality. 

The third conclusion is that neither the members 



,82 CROSS CURRENTS IN EUROPE TO-DAY 

of parliaments nor the masses of the people knew 
what was going on behind their backs. Had all the 
records been open what would have been the result? 
That is the question. 



IV 

THE ECONOMIC OUTCOME 
OF THE WAR 

FOR many years before the Great War, the 
statesmen and diplomats of Europe pursued, 
let us say patriotically and honorably, the interests 
of their respective nations as they were given to 
see those interests. To accomplish their purposes, 
they relied upon secret negotiations, alliances, 
ententes, conversations, and understandings and 
upon huge military and naval equipments. There 
were some critics who protested against these 
methods and these reliances, but the statesmen and 
diplomats were above all things practical men. 
Their ways were old and tried while all new ways 
were the ways of visionaries. The practical men 
had their day. The Great War and its results are 
the- full fruit of their planting and their cultivating. 
The present state of Europe is a tribute to their 
powers of divination and to their genius for the 
instant need of things. 

There is no doubt about the present state of 
Europe. Every day news, every book, every arti- 
cle dealing with Europe bears witness to the chaos 
that has followed the armistice. Statistical tables 
that will not be denied tell of staggering debts, 

83 



84 CROSS CURRENTS IN EUROPE TO-DAY 

mounting deficits, paralyzed industries, inflated cur- 
rencies, and growing bitterness. At the end of four 
years of peace, Europe is, in many respects, in a 
worse condition than at the end of four years of 
war. Conference after conference has been held 
and the assembly of the League of Nations has con- 
vened, but these things have not brought health or 
understanding. In the midst of gathering difficul- 
ties statesmen are frantically talking about "restor- 
ing the economic order of Europe," "getting back 
to normal conditions," and "re-establishing pros- 
perity." This is uppermost now in the minds of 
leaders like Mr. Lloyd George who, weary of the 
snarling voices of the Old World, are striving to 
forget the past and bring some order out of chaos. 

THE ECONOMIC FOUNDATION 
OF THE OLD ORDER 

It is fitting therefore that before examining the 
present state of European economy we should in- 
quire what was the basis of the vanished "normalcy" 
which statesmen would fain restore. It is not diffi- 
cult to find a satisfactory answer to this question. 
The prosperity of Europe in July, 19 14, depended 
on the relatively free and easy operation of eco- 
nomic forces on a world stage — a ready exchange of 
commodities, unimpeded intercourse, friendly nego- 
tiations, and spirited rivalry among all the commer- 
cial nations. There were of course tariffs, bounties, 
monopolies, state subsidies, and other hindrances to 
complete freedom, but in point of fact the mer- 
chants, manufacturers, and capitalists of all coun- 



ECONOMIC OUTCOME OF THE WAR 85 

tries had before them an immense and varied mar- 
ket for the fruits of their enterprise. 

Now strange as it may seem — and this is one of 
the paradoxes of the situation — the most important' 
branch of the trade of all European countries was 
not with the backward races of the earth which they 
were so eagerly struggling to conquer and hold, but 
with their powerful and enlightened neighbors. In 
191 1, for example, Great Britain, sold to Ger- 
many fifty-seven million pounds worth of goods. 
That was more than the value of her exports to her 
immense Indian empire with its two hundred million 
subjects. In the same year England sold to Russia 
goods to the value of twenty-two million pounds. 
That was more than she sold to all the dusky na- 
tives of her African and distant insular possessions. 
In 19 13, England's business with Germany, count- 
ing exports and imports, was equal to more than 
one-third her entire business with all her colonies, 
dominions, and dependencies. In other words, on 
the eve of the war, Great Britain's business with 
Germany — her bitterest rival — was a vital part of 
her economic life. There is another fact worth re- 
membering, namely, that Great Britain, in 19 13, 
did five hundred million pounds worth of business 
with her imperial possessions and a billion pounds 
worth of business with the lands she did not rule, 
namely, the free nations of the earth. When we 
recall that the World War cost Great Britain about 
ten billion pounds and that the annual interest and 
other charges on her debt in 192 1 amounted to three 
hundred fifty million pounds, we may be permitted 



86 CROSS CURRENTS IN EUROPE TO-DAY 

to raise a question as to whether commercial war- 
fare by arms "pays" in any sense of the word. 

The immense trade which Great Britain enjoyed 
with Germany, Austria-Hungary, and eastern 
Europe generally was built upon the prosperity of 
those sections; upon a vast economic complex with 
centres at Berlin and Vienna — especially upon the 
huge net work of agencies and enterprises which 
Germany had constructed in all parts of the world. 
Even Vienna was the metropolis of a large free 
trade empire. It was an important financial seat 
with branch banks in the leading cities of the prov- 
inces. At Vienna large undertakings were con- 
ceived, planned, and executed. It was also a rail- 
way centre with radii in every direction, affording 
ready intercourse with the whole economic area 
of the empire and making excellent connections with 
the outside world. It fostered industries of the 
finer sort dependent for markets upon distant 
places. If so-called Middle Europe constituted a 
menace to England, France, and Russia, it also, 
by virtue of its prosperity, offered them business 
opportunities both alluring and lucrative. 

Eastward, beyond the German frontier lay 
Russia. This huge agricultural country, then 
welded into a vast economic unity, afforded a grow- 
ing market for Western manufactures and poured 
millions of bushels of wheat into the industrial 
centres of Germany and England. In 19 10 Russia 
exported produce to the value of 1,383,000,000 
roubles and bought abroad goods worth 
953,000,000 roubles. Swift and direct expresses 



ECONOMIC OUTCOME OF THE WAR 87 

from Paris to St. Petersburg carried merchants and 
capitalists to and from Russia. The Siberian rail- 
way system, in process of improvement, gave con- 
stantly increasing facilities for intercourse with the 
heart of Asia, where virgin resources awaited the 
touch of western skill and enterprise. Time does 
not permit us to trace more closely the net- 
work of economic ties that made Europe in 19 14, in 
spite of its shortcomings, the most prosperous sec- 
tion of the world, save the United States alone. 
Whoever has a taste for the intricacies of chess may 
work out the details of the great economic mechan- 
ism from the voluminous trade statistics of the pre- 
war days. 

Of no less vital importance to the business pros- 
perity of Europe in 19 14 was the currency system 
which then rested upon a gold basis. The rates of 
exchange fluctuated but slightly. Belgium, France, 
and Switzerland used their francs interchangeably. 
The Austro-Hungarian crown was the medium of 
exchange for fifty million people. Within each of 
the several nations the stability of the currency af- 
forded a solid foundation for business operations. 
Merchants could lay in stocks, manufacturers could 
fill their warehouses, wholesalers could count on 
long term market conditions. Among the several 
nations, the element of speculation was relatively 
slight. Few people bought foreign currency with 
the idea of holding it for a rise. The relativity of 
exchange values depended mainly upon the bona fide 
sale and purchase of goods. There was practically 
no element of uncertainty in the matter of currency 



88 CROSS CURRENTS IN EUROPE TO-DAY 

values. Dealers in goods could look ahead for 
months or even years without having to take into 
their reckoning the possibility of great depressions 
or inflations in the currency. 

THE ECONOMIC RESULTS OF 
THE WAR AND THE PEACE 

Such were the foundations of world economy in 
August i, 19 14. Of the ruin wrought by the war 
itself it is hardly necessary to speak. The loss in 
human power was beyond calculation. The physi- 
cal damage done by contending armies was enor- 
mous. For four years immense energies were 
turned from constructive to destructive purposes. 
The foreign trade of all the belligerents was dis- 
organized and that of Germany was almost de- 
stroyed. The strains of revolution worked signifi- 
cant changes in the outlook and opinions of labor. 
Had the war been followed by an immediate restora- 
tion of the status quo of 19 14, the process of re- 
covery would have been slow and painful. But to 
the disturbances brought about by the armed conflict 
itself were added the profound commercial, ter- 
ritorial, and financial readjustments made at the 
peace table. 

These new factors, introduced at Versailles, were 
not the result of accident but of policy. There was 
a large school of economic writers in each belliger- 
ent country who believed that the hope of their 
nation's prosperity lay in the destruction of com- 
mercial rivals by military force. 

From the German side, we heard a great deal of 



ECONOMIC OUTCOME OF THE WAR 89 

this philosophy both before and during the war. 
Grumbach in his remarkable collection of extracts 
from German sources, Das Annexionistische 
Dentschland, has convicted the German imperial- 
ists out of their own mouths. Long before the 
world ever discovered Bernhardi's startling thesis, 
Treitschke had written: "We must never become 
rigid, as a purely continental policy will make us, 
but see to it that the outcome of our next successful 
war must be the acquisition of colonies by all 
means." 

After the war had been raging a year, came the 
petition of three hundred and fifty-two German pro- 
fessors demanding the annexation of a part of the 
French Channel coast, the seizure of the iron dis- 
tricts, the retention of Belgium, the occupation of 
a large domain in Russia, the enlargement of the 
colonial empire, especially in Africa, the permanent 
establishment of Middle Europe under German 
hegemony, and the collection of the heaviest possi- 
ble indemnity from France. A host of German 
writers declared the war to be in essence a vast com- 
mercial struggle between their empire and Great 
Britain and called for the liquidation of the British 
system on the day of victory. The plan, the hope, 
and the will were there but fate decreed otherwise. 
The distribution of the commercial spoils of the 
world was committed by destiny to other hands, but 
the distribution took place. 

Such theories were by no means confined to the 
Germans. Everyone at all familiar with English 
newspapers, magazines, and parliamentary speeches 



90 CROSS CURRENTS IN EUROPE TO-DAY 

between the years 1890 and 19 14 knows how insis- 
tant was the reiterated clamor in many quarters for 
protection and retaliation against German compe- 
tition. The demands ranged from appeals for high 
tariffs against things "made in Germany" to calls 
for war. In 1897, a hotheaded writer in the 
Saturday Review voiced the sentiments of many 
Englishmen when he exclaimed: "A million petty 
disputes build up the greatest cause of war the 
world has ever seen. If Germany were extin- 
guished tomorrow there is not an Englishman in the 
world who would not be the richer. Nations have 
fought for years over a city or a right of succession; 
must they not fight for two hundred and fifty mil- 
lion pounds of commerce? .... England has not 
awakened to what is alike inevitable and her best 
hope of prosperity. Germaniam esse delendam." 
"Sweep away the whole of the over-sea possessions 
of Germany, and whatever the cost of this war may 
be to us in men and money, we shall breathe freely 
for generations to come," declared a writer in the 
Daily News of August 25, 19 14. "A steady war of 
attrition must be waged against German com- 
merce, finance, credit, and means of livelihood," 
wrote another correspondent in the London Times 
of December 13, 19 14. "To defend British 
industry and British labor against German compe- 
tition. To fight against German influence in our 
social, financial, industrial, and political life. To 
expel Germans from our industries and com- 
merce" — such was the avowed purpose of the Anti- 



ECONOMIC OUTCOME OF THE WAR 91 

German Union formed under high auspices shortly 
after the outbreak of the war. 

The victorious allies at Paris applied with a ven- 
geance the theory that the commercial ruin of Ger- 
many would work for their benefit, and we have 
been able to see the concrete results of that partic- 
ular economic doctrine. Since nearly all the nations 
of the earth had been brought into the fray against 
the Central Powers, the Allies were able to destroy 
the banks, investments, concessions, industries, and 
commercial agencies belonging to alien enemies in 
all parts of the world. Furthermore in the treaty 
of peace, the Allies expressly reserved "the right to 
retain and liquidate all property, rights, and inter- 
ests belonging, at the date of the coming into force 
of the present Treaty, to German nationals or com- 
panies controlled by them, within their territories, 
colonies, possessions and protectorates, including 
territories ceded to them by the present Treaty." 
'By way of supplement, the Allies took away from 
Germany all her overseas colonies and posses- 
sions, seized the railways and other government 
property, and left Germany responsible for the 
payment of debts incurred in creating this property. 
Having disrupted Germany's world-wide trade net- 
work, and having seized her colonial dominions, 
the Allies gave her the finishing blow by taking 
away from her all merchant vessels over 1600 tons 
burthen and half the ships between that 1600 and 
1000 tons. 

This is not all. German property in enemy 



92 CROSS CURRENTS IN EUROPE TO-DAY 

countries was not automatically restored at the close 
of the war. It had been largely liquidated, often 
in the interests of commercial rivals, and no general 
restoration could have taken place if it had been 
thought desirable. Moreover all the enterprises 
and concessions owned by the Germans in Russia, 
Turkey, and China were taken from them. 
Article 235 of the treaty also provided that Ger- 
man business concerns even in neutral countries 
could be liquidated for the benefit of the Allied 
powers. Thus it seems that nothing, absolutely 
nothing, was overlooked which might contribute to 
the commercial ruin of Germany. The economic 
foundations of her prosperity were torn away. 
Middle Europe was broken up and her world-wide 
system of colonies and trade agencies was dissolved. 

It may be said that all this was merely just retri- 
bution for sins committed. Those whose minds are 
fixed upon punishment rather than restoration must 
of course be prepared to accept the consequences of 
their policies in the economic sphere. There seems 
to be no doubt that the cosmic process often departs 
from the rules and aspirations of the shop keeper. 

The same clash over ethics and economics has 
arisen in connection with the next troublesome factor 
introduced by the Treaty of Versailles, namely, the 
reparations bill assessed against the vanquished. 
The Germans insist that they made their appeal for 
peace on the basis of President Wilson's principles 
and they have never grown weary of calling atten- 
tion to the fact that he had openly repudiated an- 
nexations, contributions, and punitive indemnities. 



ECONOMIC OUTCOME OF THE WAR 93 

Those who are given to viewing politics and diplo- 
macy somewhat coldly reply that the Germans had 
a year and a half to leap at the opportunity of mak- 
ing peace on Mr. Wilson's principles but did not 
take t'he matter, seriously until they were beaten on 
the field of battle. Still the fact stands that on the 
face of things the armistice was made upon the 
broad and general terms laid down by President 
Wilson, with some reservations. 

It is idle perhaps to discuss the contractual 
nature of the terms of the armistice as a basis for 
the Versailles Treaty. One thing is certain and 
that is that Mr. Lloyd George and M. Clemenceau 
had no thought of offering anything but severe 
terms to the Germans. The former declared a few 
days after the armistice and long before the Ver- 
sailles settlement that "all the European allies have 
accepted the principle that the Central Powers 
must pay the cost of the war up to the limit of their 
capacity." The latter, more given to silence, set- 
tled down in grim determination to get what he 
could get without resort to rhetoric. It is true that 
both premiers admitted for verbal purposes the prin- 
ciple that they were limited by President Wilson's 
doctrines and the armistice terms, but they found 
the broad generalities of both programs susceptible 
of generous interpretation. In the armistice pro- 
visions Germany had agreed to "make compensa- 
tion for all damage done to the civilian population 
of the Allied and Associated Powers and to their 
property ... by such aggression by land, by sea, 
and from the air." When the bill for such damages 



94 CROSS CURRENTS IN EUROPE TO-DAY 

was tentatively figured up at Paris it fell far short 
of the amount which the victors hoped to extract 
from the vanquished. The question was raised as 
to whether pensions and separation allowances 
could not be included under the general terms of 
the armistice. The American experts at the peace 
conference argued that such a charge was in fact a 
cost of war, not a civilian damage, and therefore 
could not be included in the total amount assessed 
against the enemy; but President Wilson when con- 
fronted by what was called the logic of the armistice 
obligations exclaimed: "Logic! Logic! I don't 
care a damn for logic. I am going to include pen- 
sions. " So pensions were included, more than 
doubling the amount of Germany's bill. 

Having done their best to conciliate the angry 
public opinion in their respective countries by keep- 
ing to generalities, the Allied negotiators shrank 
from fixing in the treaty the exact sum to be col- 
lected from the defeated foe. They made a long 
and imposing list of items for the grand account but 
appended no exact figures. This was not because 
figures in abundance were wanting, but because it 
was easier to agree on generalities and postpone 
the evil- day of an exact reckoning. In vain did 
many experts, especially on the American side, 
insist upon the healing advantages of a specific 
amount. They were overborne. The difficult 
and thankless task of fixing the bill of damages was 
handed over to a Reparation Commission charged 
with the duty of presenting the grand total to the 
German Government not later than May i, 1921. 



ECONOMIC OUTCOME OF THE WAR 95 

So for two years the victors did not know how 
much they were to get and the vanquished did not 
know how much they were to pay — a state of 
affairs perhaps convenient for politicians but dis- 
astrous to sound public and private economy. 

Leaving out of account the ships turned over to 
the Allies, the property restored to occupied coun- 
tries, the territories ceded, the economic privileges 
granted, and a few other things, the grand bill of 
obligations under the reparation clauses of the Ver- 
sailles treaty was completed and handed to the 
Germans on May 5, 192 1. Anticipating the diffi- 
culties in collection, the Allied statesmen provided 
that the total should be represented by three classes 
of bonds. The first class is for $3,000,000,000; 
the second for $9,500,000,000; and the third is for 
$20,500,000,000, making in all $33,000,000,000. 
To meet the interest and amortization charges, 
Germany must pay every year two billion marks 
gold in money or in kind and an additional amount 
equal to 26% of the value of her exports, subject to 
possible modifications by agreement. 

Thus the entire bill is at last made up, at least on 
the face of things, but those who made it act as if 
they thought it could not be paid. They have pro- 
vided that the last class of bonds shall not be 
issued and shall not bear interest until it seems 
probable that the interest and amortization charges 
can be met by Germany. How much can be col- 
lected under the export tax scheme remains uncer- 
tain. As Germany had enjoyed a respite for more 
than two years she readily met the first installments 



96 CROSS CURRENTS IN EUROPE TO-DAY 

of the grand bill. Such is the irony of history that 
she was able to do this partly out of paper marks 
sold to speculators in the United States. How 
long Germany can continue to meet her successive 
installments remains uncertain. Perhaps it is use- 
less to indulge in any reflections on the subject. 
That indefatigable student of the economic aspects 
of the peace, Mr. Keynes, estimates that the repara- 
tion demand, under the settlement mentioned 
above, will "by itself absorb more than the whole 
of the existing revenue" of the German Govern- 
ment. 

When all arguments about the ethics of the repa- 
ration bill are closed there remains what Carlyle 
would call the immense and indubitable fact that all 
payments on it must be made, in the long run, in 
goods. Germany cannot pay in gold because she 
does not have it. To take away from her the little 
gold she has left would complete the ruin of her 
currency system. Germany must pay in goods, 
mainly manufactured goods — the very goods with 
which the Allied countries are already overstocked. 
Before the war, they were in mortal peril of having 
these very goods dumped on their markets at low 
figures. Now, if the reparations bill is to be paid, 
Germany must dump them free of charge. The 
paradox is amusing, but there it is. The claimants 
want to be paid but not in the one kind of coin in 
which payments can be made. 

In addition to disturbing trade and manufactur- 
ing, the reparations requirements keep the rates of 
exchange in an uncertain and troubled condition. 



ECONOMIC OUTCOME OF THE WAR 97 

No kind of stabilization can be attained while such 
huge transactions must be made — not as the result 
of normal trading operations but as the price of 
victory and defeat. Reparations, therefore, con- 
tribute to the paralysis of industry in England, 
France, and Italy, and make impossible the stability 
of exchange which is the foundation of normal busi- 
ness. 

Commercial disruption and rivalry, heavy in- 
demnities, — the catalogue is not yet complete. The 
application of the fine principle of "nationalism" 
has wrought a havoc in the economic texture of 
Europe which can only be repaired in the course of 
many years, if indeed it is not made worse with 
the sharpening of racial conflicts. Nationalism is 
based upon ethnic and mor'al considerations. It 
means unity and self-government for peoples akin 
in race and language and occupying a given geo- 
graphical area. It has no necessary connection 
with economic foundations of prosperity. Racial 
unity in itself ignores such matters as coal, iron, 
and raw materials. It disregards the former mar- 
ket connections which made for local prosperity. 
It creates states without taking into account the 
material basis necessary for the life of the inhabi- 
tants, this in spite of the fact that all peoples must 
live by agriculture and industry. 

Once established on its racial foundations, the 
new nation discovers how unsatisfactory are its eco- 
nomic boundaries. Indeed, every one of the inde- 
pendent nations, recently created on the principle 
of abstract nationalism, has discovered its eco- 



98 CROSS CURRENTS IN EUROPE TO-DAY 

nomic limitations and showed a remarkable will- 
ingness to violate the principle of nationalism in 
efforts to get coal and other resources at the ex- 
pense of its neighbors. In addition to reaching 
out for more territory, each ethnic unity seeks to 
build up its economic sufficiency by tariffs, bounties, 
and subsidies. The small and backward industrial 
countries struggle to maintain "infant industries" 
for national purposes and in doing this create arti- 
ficial barriers in the way of trade. 

The fruits of nationalism are particularly striking 
within the borders of the former Austro-Hungarian 
Empire. Efficiently operated railway systems have 
been broken up and reconstructed along national 
lines. New currencies with extraordinary fluctua- 
tions have appeared. Many of the small countries 
find themselves in possession of industries that 
never would have developed locally had it not been 
for the large economic complex of which the former 
province was a part. Hence a new struggle for 
markets and raw materials. New diplomatic in- 
trigues for new balances of power have been intro- 
duced, each independent nation having its large 
corps of ambassadors, consuls, and ministers. 
Financial mechanisms such as that centering in 
Vienna before the war have been disrupted and 
local and restricted enterprises substituted. In ad- 
dition, the new territorial adjustments in the in- 
terests of nationalism were carried out in such a way 
as to lay the germs of new hatreds by the inclusion 
of many aliens within the new ethnic unities. 

Moreover, the brethren now united are not as 



ECONOMIC OUTCOME OF THE WAR 99 

happy with their kinsmen as they had hoped to be. 
Although for many a long decade, orators, poets, 
and editors never wearied of telling the world about 
the splendid unity of Pan-Slavism, their prophecy 
is far short of fulfillment. It is an open question 
to-day whether the Czechs do not hate the Poles 
more cordially than they do the Germans. Once 
united by their antipathy to the Teutons, the vari- 
ous branches of the Slavic race, now that the old 
enemy is prostrate, are vigorously contending 
among themselves. Nothing but the fear of the 
return of the Hapsburgs forced the formation of 
the Little Entente between Czechoslovakia and 
Jugoslavia, with Rumania as a strange partner. 
Recently when Dr. Benes, one of the archi- 
tects of this union, was* asked whether the politi- 
cal understanding might not develop into a cus- 
toms union, he replied: "We shall have treaties 
regarding tariffs according to our mutual needs." 
When he was asked about the export duties laid 
on German goods according to the adjustments 
under the Versailles treaty, he replied: "Ger- 
many will fall. If she agrees to pay she will 
fall, and equally if the sanctions are ap- 
plied, she will fall. She will not go so low as 
Austria, because she is a much stronger national 
organism, but her export trade will be ruined and 
the mark will become of almost no value. The ap- 
plication of the export duty on German goods is 
not popular, but we are applying it. It will raise 
the cost of living and be a great inconvenience to 
many businesses which depend upon Germany, but 



IOO CROSS CURRENTS IN EUROPE TO-DAY 

on the other hand some of our younger industries 
may be helped by such a measure of protection." 
The Czechs even complain that the government of 
Poland seizes whole trains loaded with goods sent 
into that country, and the Poles make equally un- 
complimentary remarks about the Czechs. It may 
be that in time these frictions will disappear. In- 
deed they are already being reduced but for the 
present they constitute formidable barriers to eco- 
nomic prosperity and international intercourse. 

In addition to the restrictions imposed on inter- 
course by racial jealousies, there are the limitations 
made necessary by the disruption and deterioration 
of railway lines, roadbeds and rolling stock. 
European travellers who have been into southeastern 
Europe all agree on the general derangement of 
transportation. "The trains go at a snail's pace 
through Serbia," writes Stephen Graham. "One 
day we went all day and part of the night at an 
average of five kilometers the hour. . . . The rea- 
son is because the permanent way has been almost 
ruined and will need years of work upon it and all 
the bridges have been blown up. The train halts 
now and then, and then most fearfully budges for- 
ward, scarcely moves, budges, budges upon tem- 
porary wooden structures of bridges and the work- 
men down below seem veritably holding the bridges 
up whilst the trains go over them. You stop hours 
at little villages, the exhausted and damaged en- 
gines being hopelessly out of repair and always in 
repair." Another traveller, Dr. Haden Guest tells 
how it took him an afternoon, two nights, and one 



ECONOMIC OUTCOME OF THE WAR IOI 

day, in 1921, to make the journey from Bucharest to 
Sofia — a journey that in the piping times of peace 
could be made in twenty hours. "And this," he 
adds, speaking of his tiresome trip, "is first class 
express passenger traffic. The goods traffic is very 
much slower, and months elapse before goods de- 
livered at a Rumanian port reach their destination 
in the country itself. As for the ordinary postal 
service, no one who can find any other means of 
distributing mails uses it." 

When to the difficulties of railway travel are 
added the irritating requirements of the passport 
service, it is clear why a merchant would rather en- 
dure what he now suffers than search far and wide 
for new enterprises. For hours one must stand in 
line at passport and consular offices to get one's 
document approved or stamped. Frequently one can 
not stop anywhere over night without reporting to 
the police on arriving and departing. To all this 
is added the vexation of spirit caused by long delays 
at frontiers while passports are examined and 
stamped by officious busy-bodies. Moreover the 
process is expensive, for the unhappy traveller has 
to pay a handsome fee at the outset for his privileges 
and then additional fees to the officials who spread 
their rubber stamp marks and signatures over the 
wide margins of the precious parchment. 

Any one who has been through the mill, can 
testify to the vivid accuracy of the following ac- 
count given by Stephen Graham of his adventures 
in passport wonderland : "In January, 1921,1 took 
a general passport for Europe. ... I spent a week 



102 CROSS CURRENTS IN EUROPE TO-DAY 

getting visas in London. I remembered his Ex- 
cellency of Greece had changed his address. When 
the taxi-driver had located his new office in Great 
Tower Street we found that he was having a holi- 
day, celebrating New Year's day in orthodox Greek 
style about the fourteenth of the month. I re- 
turned in a few days' time and his Excellency was 
celebrating Epiphany. Next time I resolved to take 
a precautionary twenty minutes at the telephone and 
find out whether there were any other festivals on. 
The Poles, I remember, asked for answers to ques- 
tions on two sheets of foolscap and charged thirty 
shillings for a visa that went out of date before I 
could get to their country. His Excellency of Bul- 
garia I made several trips to Kensington to find, 
and gave him up as apparently non-existent. With 
the representative of Latvia I had a troublous con- 
versation and finally obtained another useless visa 
for forty shillings. The Germans would not give 
a visa as I was entering Germany from the other 
side. I spent about ten pounds in London merely 
for the application of rubber stamps and consuls' 
signatures. In the course of my travels that pass- 
port became an appalling wilderness of visas and 
remarks climbing out of their legitimate spaces to 
get mixed up with wife's signature and the color of 
the hair. The most flattering of these remarks is no 
doubt that affixed at Sofia's station — 'Not danger- 
ous to society.' But I had to show that passport 
not only to the police and military of all nations 
but also on entering the gambling halls of Monte 
Carlo on the one hand and before entering the 



ECONOMIC OUTCOME OF THE WAR 103 

gates of the Cathedral of Sancta Sophia at Con- 
stantinople on the other." Among the nations 
whose practices are thus condemned by Mr. Gra- 
ham must be reckoned the United States which 
became one of the worst offenders in the charges 
made and the red tape evolved. 

Any one who had the physical and moral stamina 
necessary for a battle over a passport did not have 
to fear the rigors and hardships of European travel: 
The effect of all these official operations on the free 
intercourse and travel so necessary to commercial 
prosperity can readily be imagined. Though some 
of the restrictions have been slightly modified under 
pressure, the main structure of the bureaucratic 
system remains intact to this hour. It gives em- 
ployment to rubber stamp artists, it flatters national 
pride, and it serves to keep alive all the precious 
antipathies aroused by the war. 

If the Great War had been of short duration, 
perhaps the Carthaginian Treaty made at Ver- 
sailles would have produced less catastrophic re- 
sults. But to the effects of the peace must be added 
the costs of a long and exhausting war, the increase 
in debts, and the derangement of the currency 
systems. During the four years of actual fighting, 
the debt of England rose from seven hundred mil- 
lion to seven billion pounds. The government of 
France owed thirty-four billion francs in 19 14; it 
owed one hundred and fifty billion in 19 18. The 
German national debt stood at five billion marks 
when the war began and at one hundred and forty 
when it closed, not counting obligations imposed at 



104 CROSS CURRENTS IN EUROPE TO-DAY 

Versailles. It is not necessary to go into greater 
detail. The fact stands out that all the belligerent 
nations are loaded with a burden of debt which, if 
it had been imposed in the interest of science, the 
arts, and humanity, would have produced nothing 
short of a revolution on the part of the taxpayers. 
Financiers who groaned and labored over pennies 
voted for education and public health in 19 14 lived 
to sow millions of pounds right and left with lavish 
recklessness in a world war. When a nation is 
struggling for existence finance as well as the laws 
are silent. Only after the armistice when the 
nations had recovered their breath, did they realize 
the magnitude of their obligations. Nevertheless, 
if all the belligerents had set quickly to work to hold 
their debts within the limits of November, 19 18, 
even the enormous totals we have just recited 
would not have been beyond their financial strength 
(leaving out of account reparations). 

Instead of balancing their budgets at once, 
all of them, with one exception, namely Great 
Britain, incurred larger expenditures than before. 
The French government, for example, has added to 
its outstanding obligations since the armistice about 
one hundred and sixty billion francs, that is, more 
than its increase in war debt. In other words, 
the French national debt has more than doubled 
since 19 18. It is true that a great deal of this ex- 
penditure must be ascribed to demobilization and 
reconstruction. Against this increase of course we 
must set the sums recoverable from Germany, 
amounts estimated at fifteen or twenty billion 



ECONOMIC OUTCOME OF THE WAR 105 

francs. Even assuming that the money can be ex- 
tracted from Germany, there yet remains the 
astounding fact that between January 1, 1920 and 
March 1, 192 1, the net debt of France, after de- 
ducting the German obligations, increased 
39,000,000,000 francs. Recently there has been a 
tendency to retrench but it makes little impression 
on the mountain of debt. The French people either 
will not or cannot tax themselves heavily enough to 
give the government revenues sufficient for its ex- 
penditures. It may be that this process can be 
kept up for a long time, assuming a proportionate 
increase in national productiveness, but it would 
seem that a day of reckoning must come. If the 
hopes now cherished in France of making the 
Germans pay all the charges laid upon them under 
the treaty settlement are not realized, then some 
kind of drastic financial reorganization can hardly 
be avoided. 

The case of Germany stands alone in many 
respects, and deserves separate treatment. At the 
opening of the war the financial condition of 
Germany was unusually good. Unlike France, the 
Imperial Government had not financed its increases 
in armaments largely out of borrowings. The 
huge military credit voted in 19 13 carried with it 
two heavy taxes, one on capital itself and the other 
on increases in private fortunes. So it happened 
that in 19 14 while France had a debt of 
34,000,000,000 francs the German debt stood at 
little more than 5,000,000,000 marks. As the 
German military party counted upon a short war 



106 CROSS CURRENTS IN EUROPE TO-DAY 

and a satisfactory indemnity at the end, there semed 
to be no reason for alarm over the financial situa- 
tion. As time wore on and the expected triumph 
did not come, the government shrank more and 
more from the idea of arousing discontent by new 
and heavy taxes. It financed the war by floating 
loans and issuing paper money. The indirect 
taxes levied between 191 6 and 19 18 proved to be 
disappointing in the results obtained. The two 
great direct levies, the War Tax of 19 16 and the 
"extraordinary war tax" of 19 18 laid upon excess 
profits were looked upon as merely temporary and 
not as a means of balancing the budget. So the 
crisis of defeat came without finding Germany ready 
for it. On the day of the armistice, the national 
debt stoood at about 140,000,000,000 marks not 
counting paper money afloat. To this burden were 
then added the cost of demobilization and the 
charge for the reparations levied under the terms 
of the treaty of peace. 

While waiting to learn the worst about repara- 
tions and wrestling with perplexing constitutional 
and economic problems at home, the German gov- 
ernment allowed its finances to collapse. The na- 
tional debt rose from 140,000,000,000 marks, 
the armistice figure, to 418,000,000,000 marks in 
1920, not including the reparations bill. The mere 
deficit in the budget of 192 1 amounted to 
71,000,000,000 marks. The amount of paper 
money in circulation rose from about two billion 
marks in 19 13 to more than 80,000,000,000 marks 
in 1 92 1. The end is not yet in sight and the real 



ECONOMIC OUTCOME OF THE WAR 107 

pressure of the reparations charges is still to come. 
Figured in paper marks the total national obliga- 
tions of Germany amount to more than seven tril- 
lion marks. Still she has been given sixty years or 
more to discharge her reparations bill. 

The paper money disease from which Germany 
suffers acutely is raging in all the other countries 
that were involved in the war. The circulation of 
the Bank of France rose from 5,723,000,000 in 
19 13 to 37,000,000,000 francs in 192 1. In the 
early months of 1922 the German Reichsbank had 
outstanding over eighty billion marks of paper 
notes. To the currency of established banking in- 
stitutions are added the notes of local banks and 
chambers of commerce. There are one franc notes 
and even twenty-five centime notes in France. Woe 
to the unlucky traveller who tries to pass the cur- 
rency of Nice or Marseilles in Paris. Even 
postage stamps were fixed inside of campaign but- 
tons and handed out as change on the buses and in 
the restaurants of Paris. Notes of all colors and in 
all conditions of servitude, torn, ragged, and dirty, 
pasted, glued, and stamped by many possessors bore 
microbes by the billions to the innocent recipients. 

The further east the traveller goes the worse the 
ravages. The star of the new fiscal empire 
makes its way toward the rising sun. Polish marks 
that were worth thirteen one-hundredths of a cent 
in 192 1 dropped heavily to two or three one-hun- 
dredths of a cent in 1922. A thousand mark 
Warsaw six per cent, bond was offered on the New 
York market in February, 1922, at $1.75 but au- 



108 CROSS CURRENTS IN EUROPE TO-DAY 

dacious buyers only cared to bid the sum of one 
dollar for such a treasure. As to Russia, the ver- 
itable wonderland of paper money, one hesitates to 
speak. The figures are so large that only astron- 
omers can handle them with safety. Not long ago 
it was estimated that some printers who stole fifteen 
billion roubles had really got away with only $70. 
Czechoslovakia, the home of relatively sound 
finance in eastern Europe, issues marks worth less 
than two cents, but issues them with comparative 
moderation. The franc and the lire show signs of 
vitality, but mainly because the foreign trade of the 
two countries is prostrate. Three years after the 
close of the war, all the former belligerents of con- 
tinental Europe are in far worse financial condition 
than on the day of the armistice. 

Commercial disruption, rivalry, heavy indem- 
nities, huge debts, inflated currencies, and national- 
istic explosions — the catalogue is not yet complete. 
Thrones, princely houses, aristocracies, and vast 
economic systems have been overturned by domestic 
revolution. We have witnessed for the first time 
the seizure of a great government by the proleta- 
riat and an attempt to establish a communistic sys- 
tem of production. We have seen whole industries 
and large cities in the hands of workingmen bent 
upon destroying the bourgeois processes of business 
and government. We have seen classes that fought 
shoulder to shoulder upon the battle field against 
a common foe, turn upon each other in terrible 
civil war. The tide of reaction has undoubtedly 
set in against radical experiments. It may go far, 



ECONOMIC OUTCOME OF THE WAR 109 

but it has not allayed the passions and aspirations 
roused by revolution. European labor, though 
divided over matters of policy, is better organized 
than ever; trade unions have multiplied their mem- 
bership two or three fold. It may be that labor 
will prove unable to establish a prosperous civili- 
zation by its own efforts; but from all appearances, 
labor will not rest content with the present distri- 
bution of wealth which, it alleges, has produced war 
profiteers at one end and slums at the other. When 
the lowest strata of society, speaking economically, 
can read and write and, through the newspapers, 
books, pamplets, and moving pictures, are pro- 
foundly stirred by all the currents of thought that 
run through modern life, it is evident that we have 
reached a new stage in the history of civilization. 
The "normalcy" of 19 14 will never return again. 

On top of commercial disorganization, indemni- 
ties, huge debts, inflated currencies, nationalistic 
rivalries, and revolutionary fevers, there came one 
of the worst industrial crises that has plagued 
Europe in many a generation. Economists familiar 
with the paralysis that struck Europe after the set- 
tlement of 18 15 had predicted that a similar crisis 
would follow the close of the World War. Their 
predictions proved to be correct. The cheerful 
prophecy that every Englishman would be richer 
the day after the downfall of Germany was belied 
by events. The year following the peace saw a 
collapse of commerce and manufacturing in all the 
victorious countries. One group of figures tell the 
story. In the third quarter of the great business 



110 CROSS CURRENTS IN EUROPE TO-DAY 

boom in Great Britain during 1920 exports, which 
stood at £124,000,000 for the fourth quarter of 
19 1 8, rose to £370,000,000. In the second quarter 
of 1 92 1, the export trade had collapsed and the 
figure for that period was £141,000,000. In spite 
of the predictions of professional optimists, no signs 
of genuine recovery are yet on the horizon. France 
and Italy are passing through a similar crisis. 
Everywhere, business depression has been accom- 
panied by its usual associates: unemployment, 
failures, reductions in wages, poverty, and discon- 
tent. An additional strain was placed upon national 
finances, especially in England, where huge unem- 
ployment benefits were paid by the government as a 
sort of insurance against social unrest. Months 
wore into years and still no revival of business ap- 
peared. 

At the conclusion of a careful survey of European 
economic conditions, Bass and Moulton, in their 
important book published late in 192 1, declare 
"that European trade this year has, on the whole, 
been very much less satisfactory than it was in 
1920. According to the foreign trade index, Europe 
is not yet coming back; on the contrary, the real eco- 
nomic aftermath of the war is now making itself 
felt." These authors are also of the opinion that 
the present crisis is not comparable to the business 
depressions of previous periods when the finances 
and currencies of the various countries involved 
were on a relatively sound basis. The existing 
panic they regard as a political rather than a purely 



ECONOMIC OUTCOME OF THE WAR III 

economic affair and they believe that "without a re- 
turn of prosperity many existing European govern- 
ments will sooner or later succumb under the finan- 
cial strain to which they are now being subjected." 

In all the belligerent countries,, agriculture, like 
manufacturing, seems to have suffered from a de- 
pression more or less extended. In England and 
Wales, the production of wheat, barley, and oats 
in 1920 fell back to about the pre-war figure of 19 13. 
In 19 1 8, the production of wheat was 10,530,000 
quarters; in 1920 it fell to 6,669,000 quarters. In 
France where a large area was laid waste by war, 
the crops of 1920 as compared with those of 1913, 
not adding the production of Alsace-Lorraine, were 
twenty five per cent below the pre-war basis. In 
Germany where agriculture suffered none of the 
devastating effects of war, the crops show a decline 
from the high tension of war days, but taking all 
things into account seem to amount on the average 
to the normal pre-war output. The same may be 
said of Austria proper, although there and in Ger- 
many the situation as regards live stock is by no 
means normal. 

Over wide reaches of eastern Europe, the output 
of farm produce is far below that of 19 14. The 
ravages of war are partly responsible. To this 
cause must be added the breakdown of Russian 
economy under Bolshevik management. The ab- 
olition of private trading, as the Bolsheviki them- 
selves admitted, had an immediate and ruinous ef- 
fect upon agricultural production, and the policy 



112 CROSS CURRENTS IN EUROPE TO-DAY 

has been abandoned in favor of private economy. 
On top of this however came the terrible famine 
which added to the distress of Russia. 

In Poland, Czechoslovakia, and Rumania, where, 
as in Russia, the destruction of great feudal estates 
has been in progress, agriculture is in a transition 
stage. Impartial witnesses testify to the fact that, 
at least in the beginning, the system of peasant pro- 
prietorship is not as productive as that of large 
estates under more efficient management. The 
ignorance of the peasantry in states like Rumania is 
a handicap to the rapid recovery of agriculture and 
will cause a drag on progress in that field for a long 
time. 

Such is the rather doleful picture which econo- 
mists draw of Europe and we are told that the 
worst is yet to come. Nevertheless strange as it 
may appear the course of life in western and cen- 
tral Europe seems to the outward eye to flow along 
very much as before the war. The mill hands that 
swarm the streets of Manchester look like the peo- 
ple who cheered the news of Kitchener's triumph at 
Khartoum and the relief of Mafeking. Oxford 
Street and Piccadilly in London are the same, except 
for the veterans of the World War turning hand 
organs and begging coppers at the curb. Paris, a 
bit subdued, is still Paris. Rome is unchanged ex- 
cept for the new excitement made by bands of Fas- 
cisti. The cafes are crowded with soldiers while 
in the countryside the old men and women with their 
gnarled hands dig in the fields and on the hills. 
Restoration on the northern battlefields goes on like 



ECONOMIC OUTCOME OF THE WAR 1 13 

magic. The throngs in the beer gardens of Berlin 
and the coffee houses of Vienna discuss defeat in- 
stead of victory, but they are as large and enthusi- 
astic as in the gay times of the Hohenzollerns and 
the Hapsburgs. Only to the eastward are there un- 
mistakable signs of ruin and despair. But econo- 
mists warn us that the peace of Europe is only the 
calm before the storm, that trade grows worse, that 
attempts to collect the indemnities will produce a 
crash, and that unless something drastic is done the 
deluge will be upon us. Their arguments seem con- 
vincing, but still their reasoning may be a delusion. 

SCHEMES FOR THE RESTORATION OF 
EUROPEAN ECONOMY 

The sickest man in Europe is no longer Turkey; 
all Europe is sick, and the doctors are on hand with 
remedies. It would take an encyclopaedia of medi- 
cine to summarize all their prescriptions, but some 
of the most striking may be briefly examined. 

There is first of all the school of doctors who pre- 
fer to let nature take its course. They have a theory 
that the designs and will of man can avail little while 
unconscious and half-conscious forces struggling for 
expression may accomplish much. 

Next is the growing school of French intran- 
sigents represented by Cheradame and Gautier, who 
roundly condemn England for betraying France into 
the hands of the enemy, and demand a vigorous 
forward policy. Gautier favors cutting loose from 
England and taking the Germans aside for a private 
conversation. He would say to the fallen foe: 






114 CROSS CURRENTS IN EUROPE TO-DAY 

"Complete and rapid reparation of the ruins in 
France and Belgium, in kind or in money, indemni- 
ties to the victims of the war which you have made, 
and finally the delivery of the armament required 
by the Treaty. ... If these demands are not 
fully carried into effect, we have decided to employ 
to the limit all the means of coercion which our 
actual military position permits us to apply." Chera- 
dame, who thinks that Mr. Lloyd George is in the 
hands of Pan-German Jews, calls for the formation 
of an eastern bloc against Germany and the exer- 
cise of compulsion by relentless encirclement. These 
plans contemplate a balance of power under French 
hegemony — with Germany and Russia driven into 
an alliance. What lies beyond almost any short- 
sighted person can guess. 

At the opposite pole almost, are two experienced 
American economists, Bass and Moulton, who after 
a careful survey of the present economic condition 
of Europe, reach certain decided conclusions as to 
the remedies for the disease. To those who think 
that time cures all things, they reply with a touch 
of dry sarcasm, that it does — it did for Babylon 
and Nineveh. All minor remedies they reject. 
They tell us that the continued extension of Ameri- 
can credits to Europe will not help the situation. 
Indeed it may make confusion worse confounded. 
They do not think that devices for extending our 
trade abroad will touch the fringe of the dilemma. 
They bluntly tell us that exchanges can not be sta- 
bilized until European budgets have been read- 
justed and until trade-balances are put on an even 



ECONOMIC OUTCOME OF THE WAR 115 

keel. Still more bluntly: "Foreign exchanges can 
not be stabilized so long as reparations and Allied 
debts require to be paid." 

Here, then, is the bitter medicine which Bass and 
Moulton prescribe: (1) reparation-demands must 
be reduced and inter-European war-debts can- 
celled; (2) tariff-barriers must be reduced and gov- 
ernment support for trade-promoters abandoned; 
(3) national budgets must be balanced, debts re- 
duced, and paper money curtailed; (4) the United 
States must cancel the war debts, reduce armaments, 
lend some more money to Europe for constructive 
purposes, and lower its tariffs; (5) there must be 
some kind of league of nations to manage, in a 
spirit of honesty and fairness, the common con- 
cerns of the world. The United States is in a 
strategic position to make Europe take notice and 
set her house in order. 

An alternative is presented by these two au- 
thors. The United States may let Europe stew in 
her own juice, go in for armaments and imperial- 
ism, and clean up everything in sight, now that 
the chief artists in that line are hors de combat. 

Another American, a financier of large experience, 
Mr. Frank Vanderlip, after a visit to many Euro- 
pean countries, has come to similar conclusions. He 
believes that a radical revision of the Versailles 
Treaty must come; and that measures similar to 
those put forward by Bass and Moulton cannot be 
avoided if "restoration" is to be effected. He sug- 
gests also the creation of an international, or if 
possible a super-national, banking corporation, per- 



Il6 CROSS CURRENTS IN EUROPE TO-DAY 

haps under the auspices of the League of Nations. 
It would be established on a gold basis and be di- 
rected by a body of European and American finan- 
ciers. It would make loans against material goods, 
raw or in process of manufacture, not against cor- 
porate stocks or government bonds. It would issue 
notes on a gold basis designed to circulate on identi- 
cal terms in all countries, thus giving at least one 
uniform world currency. It would receive deposits 
and transact through its various branches a truly 
international business. The effect of such an insti- 
tution, it is thought, would be to place the economy 
of all countries on a sound financial basis, leaving 
the currencies of the several governments to battle 
with fate against real money. Whatever may be 
the merits of this proposal, and its merits are un- 
doubtedly great, it has against it the special interests 
of the various nations that would be affected by it. 
French, German, Italian, Polish, and other bankers 
think that it is still possible to drag through the 
present paralysis or at least postpone indefinitely 
the evil day of reckoning — perhaps on the well 
known theory, "after us the deluge." 

The eminent English economist, Mr. John May- 
nard Keynes, who aroused the interest of the whole 
world by his book on the economic consequences of 
the peace, brought out early in 1922 a second book 
on the same subject entitled "A Revision of the 
Treaty." In this new work, he suggests four things 
as necessary to the restoration of Europe : ( 1 ) the 
cancellation of inter-allied indebtedness including 
the amounts owing to the United States; (2) the 



ECONOMIC OUTCOME OF THE WAR 117 

reduction of the German reparations bill; (3) a 
fair distribution of the amount collected between 
France and Belgium; and (4) economic assistance 
to the new states of eastern Europe. By this 
method, he thinks, "peace and amity might be won 
for Europe." 

In fact there is a large school of economists in 
Europe and the United States who insist that a 
restoration of old Europe is impossible by purely 
national efforts and that it would be undesirable if 
possible because it would lead to the renewal of all 
the old hostilities and imperial rivalries which pre- 
cipitated the late crisis. They insist upon the for- 
mation of the United States of Europe, and in this 
they have the support of the American analogy. 

In 1783 our country came out of a seven years' 
war, with commerce, industry, finance and currency 
in a chaos resembling that of the Old World today. 
Though not as dependent as modern peoples upon 
foreign commerce for their livelihood, the Ameri- 
cans had found the English blockade, loose as it 
was, ruinous to their shipping and trade. The 
neutral vessels that plied their arts in the midst of 
great hazards had not been able to make up for 
the loss of English business. Commerce was pros- 
trate. Industry, slight but yet important, had been 
either turned into military service or allowed to 
lapse. The artisans of the towns, even though 
comparatively few in numbers as measured by mod- 
ern standards, suffered from unemployment. The 
governments of the American Confederation and of 
the several states were staggering under a heavy 



I 1 8 CROSS CURRENTS IN EUROPE TO-DAY 

burden of debt, domestic and foreign. The reve- 
nues of the former dwindled away as patrotic fervor 
died down and those of the latter were seldom suf- 
ficient to meet the fixed obligations. The disorders 
in the currency were, if possible, even worse than 
in the other branches of economic life. Like all 
other governments confronted by necessity, those 
of our revolutionary times resorted to the printing 
press. "Do you think," exclaimed one of the 
Fathers, "that I will consent to load my constituents 
with taxes when we can send to the printer and get a 
whole wagon load of money, one quire of which 
will pay for the whole?" When once this rock 
of public resource was struck, paper money gushed 
forth in never-ending streams. At the close of the 
Revolution there was outstanding about $450,000,- 
000 in the currency of the states and the national 
government. When peace came at last the habit 
could not be broken. It was easier to print and 
borrow than to tax and collect. The printing press 
was thought to be the cure for all the ills from which 
trade, commerce, and industry suffered but each new 
issue proved more disappointing than its predeces- 
sor and finally leaders in public affairs decided that 
the country would have to choose between putting 
its house in order and falling into a chaos followed 
by destruction. The Constitution of the United 
States was the outcome of this decision. 

The medicine offered by the Constitution was ex- 
tremely bitter to large sections of the country and 
its adoption was brought about only by the use of 
the most heroic methods. But it was finally car- 



ECONOMIC OUTCOME OF THE WAR II9 

ried. Under its terms a number of fundamental 
economic reforms were accomplished. The im- 
mense outstanding debt, state and national, was 
funded into one grand consolidated debt under- 
written by the authority of a central government en- 
dowed with power to tax. The national paper 
currency, fallen into utter contempt, was redeemed 
at the magnificent figure of one cent on the dollar. 
Most of it expired in the hands of the unhappy 
holders. Tariff barriers erected by the states 
against one another were broken down and trade 
on a national scale made free. Measures were 
taken to adjust relations with foreign countries and 
to restore commerce to a normal basis. The 
states were forbidden to emit bills of credit or to 
make anything but gold and silver legal tender in 
the payment of debts. Thus there was laid out a 
new course based upon established business princi- 
ples, and under the new order the country recovered 
from its paralysis and entered upon an era of work 
and prosperity. Still it must be remembered that 
the Revolutionary war lasted seven years and that 
the period of confusion which had followed the war 
continued for six years more. It was a long "criti- 
cal period," and nothing but grinding necessity 
brought about the final cooperative effort that cre- 
ated the Constitution. 

THE DRIFT OF THINGS 

If we look beneath the schemes of the reformers, 
who seek peace in a kind of constitution for Europe, 
to the realities of Europe we cannot escape seeing 



120 CROSS CURRENTS IN EUROPE TO-DAY 

certain very striking tendencies in the practical con- 
duct of affairs. On the side of restoration and re- 
covery may be set many things. In Eastern Europe, 
the new republics are slowly seeing the folly of 
constant bickering. A score of new treaties, politi- 
cal and commercial, have been signed during the 
past four years clearing away antagonisms and 
opening the channels of trade. The Baltic states 
seem to be on fairly good terms with their neigh- 
bors. Even Czechoslovakia and Austria, a few 
days before last Christmas (1921), reached an ac- 
cord respecting political and commercial relations. 
The members of the old Austro-Hungarian empire 
are learning that wrath of man produces no turnips 
and that pride of race covers no nakedness. Ger- 
man business enterprise is swiftly building a new 
'Middle Europe, economic rather than political, the 
harbinger of extensive industrial activity. Russia 
for a long time sat in outer darkness, but as 
many separate commercial treaties attest, most of 
Europe seems at last inclined to renew its connec- 
tions with that vast empire with its laborious peas- 
antry and its undeveloped natural resources. In- 
deed, the Bolsheviki have abandoned communism as 
applied to the land and are swinging toward a form 
of state-capitalism which admits of private enter- 
prise and individual initiative. Still there is poli- 
tics mixed with this economics. The new alignments 
of power among Poland, Czechoslovakia, Hun- 
gary, Rumania, and Jugoslavia are closely related 
to the encircling policy which the French intransi- 
gents have in mind and may lead to war rather than 
to peace. 



ECONOMIC OUTCOME OF THE WAR 121 

In German affairs, the drift in finance and in in- 
dustry is unmistakable. The democratic forces of 
Germany are disconcerted and beaten. The peo- 
ple who led the revolution thought that the over- 
throw of the old government and the retirement of 
the bureaucrats and militarists would bring easier 
terms at the council table. That hope failed. The 
Wilsonian peace was not realized, and the anger 
that accompanied the defeat of the peace-makers 
fell with terrible weight upon the leaders responsible 
for signing the Treaty. This produced the inevita- 
ble reaction. Taxes are never popular. Taxes to 
pay bills presented by a triumphant foe can hardly 
be characterized at all. The capitalists will not 
suffer the government to levy upon their huge war 
profits and the revolutionary working class will not 
endure indirect taxes. Both capitalists and laborers 
are so closely organized that no government dares 
to defy them. 

The attempt to collect a heavy reparations bill 
in Germany by the ordinary political processes will 
prove extremely difficult. That truth is concretely 
illustrated in the tragic career of Herr Erzberger. 
He came to the head of the treasury several months 
after the November revolution of 191 8 which 
turned Germany into a republic. His predecessors 
under the democratic regime had not dared to 
touch the problem of finance for fear of letting loose 
forces which they could not calculate. Erzberger, 
whatever may be said of his versatility and it was 
very great, was a man of considerable courage. He 
had been an imperialist in the days when victory 



122 CROSS CURRENTS IN EUROPE TO-DAY 

perched on German banners. He later sensed de- 
feat from afar and, convinced that an early peace 
was necessary to save the country, he took the lead 
in advocating a peace without annexations and in- 
demnities. For this he incurred the enmity of many 
of the militarists who, defeated in their game, did 
not have the courage to face the inevitable. When 
the breakdown finally came, Herr Erzberger forged 
to the front. He urged the ratification of the Ver- 
sailles treaty, in spite of its drastic terms. Soon 
afterward called to the ministry of finance, he set 
about fiscal reforms with a zeal that shocked the 
potential taxpayers. He proposed a heavy income 
and profits tax, an extraordinary levy on inheritances, 
and finally what he spoke of as "a national sac- 
rifice tax." This last was a call upon all Germans 
to surrender to the state a goodly share of their 
private fortunes — a tax ranging from ten per cent 
on fifty thousand marks to slightly more than fifty 
per cent on an estate of eight million marks. To 
these direct taxes were to be added indirect taxes 
falling heavily upon all business and commercial 
transactions. Furthermore by way of a prelimin- 
ary a complete revolution in the fiscal relations of 
the national government and the states was devised 
and executed. 

The storm of wrath that broke when Herr Erz- 
berger laid his program before the country was 
terrible. The possessing classes, capitalists and 
landed gentry alike, assailed it from all sides. 
Though it was evident that some such prodigious 
fiscal enterprise was necessary to make even the nor- 



ECONOMIC OUTCOME OF THE WAR 123 

mal budget balance, Herr Erzberger's plans were 
cut down and modified until they fell far short of 
the object in view. The attempts to execute the 
laws that did get through the national legislature 
met with every kind of an obstacle. A great deal 
of capital fled from the country, the bureaucracy 
blocked the efficient administration of the measures, 
taxpayers devised new schemes for escaping their 
burdens, and business men resisted what they re- 
garded as systematic confiscation. To these dif- 
ficulties were added others. All the natural hatred 
of taxpayers for the authors of their miseries was 
mingled with the wrath of the militarists and landed 
aristocracy of the old regime. Beaten and dis- 
couraged, Herr Erzberger gave up the task, and re- 
tired only to meet his fate at the hands of an assas- 
sin. His successor, Dr. Wirth, fell back upon the 
good old expedient of printing paper money to pay 
the bills, with results already widely advertised. 
If such was the outcome of a sincere attempt to re- 
store order in German finances before the imposi- 
tion of the reparations burden, what is to be ex- 
pected from new efforts along that line? 

In casting about for a scapegoat, the Germans 
seized upon the authors of the Treaty of Versailles. 
To that fateful document they traced the origins of 
their financial ruin. A congress of bankers held 
in Berlin during October, 1920, solemnly decided 
that there was no salvation for Germany outide of 
a revision of the treaty. If they had looked east- 
ward they would have found a country laboring un- 
der no obligations for reparations, namely Poland, 



124 CROSS CURRENTS IN EUROPE TO-DAY 

with finances in still greater disorder. If they had 
looked at the victorious French republic they would 
have found deficits almost as staggering as their 
own. But it was easier for the taxpayers to con- 
demn the settlement of Versailles than to make out 
checks for their taxes. So the world witnessed a 
country possessed of great industrial resources and 
immense private fortunes unable to pay its current 
expenses — a nation in which capitalist corporations 
were paying from ten to eighty per cent profit 
while the government was impoverished. 

Although the Germans resent any mention of re- 
parations, German capitalists forge ahead with more 
zeal and efficiency than ever in organizing their eco- 
nomic Middle Europe and in reaching out for world 
markets. The treaty of peace was hardly signed 
before this renewed economic activity attracted the 
attention of all observers. A few German leaders, 
like Albert Ballin, director of the Hamburg-Ameri- 
can Line, withdrew broken-hearted from the com- 
mercial sphere while the militarists of old Prussia 
sulked in their tents, but men like Hugo Stinnes and 
the Kirdorfs, the Rockefellers and Garys of 
Germany, set about reconstructing the industrial life 
of their nation on a better organized and more 
efficient basis than ever. In July, 1920, the Ger- 
man-Luxemburg Mining and Smelting Company 
combined with the Geselskirchen Company creating 
the Rhine-Elbe-Union. A few months later this 
vast combination acquired the Bochum Company en- 
gaged in mining and manufacturing cast steel. 
About the same time the gigantic electrical enter- 



ECONOMIC OUTCOME OF THE WAR 125 

prise of the Siemens Company was brought into the 
Stinnes sphere, thus fusing concerns engaged in pro- 
ducing raw and finished products. Then copper, 
brass, and automobile works were added to the con- 
solidation. In 192 1 the Stinnes trust went across 
the border and absorbed the Austrian Alpine Min- 
ing Company which owned the Styrian ore deposits 
and before the war supplied the Balkans and Italy 
with immense amounts of iron and steel. Thus 
part of the loss sustained in Alsace-Lorraine was 
made good, and a fusion of German coal and Aus- 
trian iron ore facilitated. Not yet satisfied, Stinnes 
laid hold of the wood pulp and paper industry and 
then having possession of the raw materials he 
bought up a string of newspapers and book publish- 
ing concerns. It was rumored that he had in his 
grip no less than sixty newspapers, powerful organs 
of opinion, but his conservative biographer thinks 
that the number probably does not exceed twelve. 

Having effected a mighty combination for the 
manufacture of hundreds of different articles from 
dolls to dynamos, Stinnes created an export depart- 
ment in his Transportation and Overseas Trading 
Company. His concern was licensed "to engage in 
transportation of every description as well as to 
build and manufacture all shipping accessories 
whether at home or abroad; to deal in the products 
of the mining, smelting, and metal industries, the 
chemical and electrical industry, and agriculture; to 
market articles of every stage of manufacture, as 
well as raw materials of all kinds, especially, pro- 
visions and cattle products, mineral, animal, and 



126 CROSS CURRENTS IN EUROPE TO-DAY 

vegetable oils, cotton and other textiles in the un- 
finished state, hides, jute, wood, cellulose, paper, and 
all products of the intermediate industries; and to 
engage in the reshipping and storage of all these 
products, especially during their transmission to or 
from foreign countries." 

After freight come passengers. Having estab- 
lished the Hamburg Travellers Company, Stinnes 
entered into an arrangement with the Hamburg 
American Line, rehabilitated with the aid of Ameri- 
can capital, to reconstruct the tourist and hotel busi- 
ness. Steamer cabins, sleeping car berths, and 
hotel rooms were organized in a chain and operated 
as one system giving the tourist complete relief from 
all the bother of his travelling arrangements. 
Whether he wishes to visit the Italian Riviera or the 
Canadian Rockies, the Hamburg Travellers Com- 
pany will look after his needs and supply him with 
almost every thing from Westphalian ham to elec- 
tric lights. All this has been brought about by the 
wonder-working Stinnes who in the fertility of his 
resources and the sweep of his imagination is worthy 
of ranking with such men as Edward Harriman and 
James J. Hill. 

A special feature of this new industrial activity 
is the formation of the vertical as well as the hori- 
zontal trust. The latter is a well known and well- 
tested organization. It consists in the union of all 
the industries of a given field, such as coal, steel, or 
electricity, in a single coal, steel, or electrical com- 
bination. The German magnates of the new order 
are not content with any such simple and relatively 



ECONOMIC OUTCOME OF THE WAR 127 

easy undertaking. They are bringing about verti- 
cal as well as horizontal combinations; that is to say, 
they are creating industrial organizations to handle 
goods in all stages from the mines and forests to the 
finished products. The same concern will mine coal 
and iron, make steel, manufacture electrical appli- 
ances, build automobiles and ships, and carry to any 
part of the world the finished articles in its own 
vessels, financed by its own banking corporation. 
Thus the profits of the special industries which con- 
stitute a tribute levied at ten or more points are 
abolished and the wastes of competition are elimi- 
nated. Such a company can, if it will, undersell 
any competitors who are sustaining corps of prof- 
iteers attached like barnacles to the various indus- 
tries through which the raw materials pass. By the 
horizontal and vertical organization of industry 
German capitalists hope to outbid, undersell, out- 
maneuver the business men of other countries who 
cling to the archaic methods common in the opening 
years of the twentieth century. As the government 
owns the railways and waterways and is in point of 
fact dominated in such matters by industrial inter- 
ests that look upon transportation as a means not 
an end, the carriage of freight to the sea ports is 
brought into harmony with the requirements of 
business. 

It is also a matter of note that Germany has no 
Sherman Anti-Trust laws. Smaller business men 
who are not able to keep the pace set by Stinnes 
and Kirdorf are not permitted to run to the legis- 
lature and set loose a pack of prosecutors upon the 



128 CROSS CURRENTS IN EUROPE TO-DAY 

rivals who have beaten them in the great game. 
On the contrary, every German government since 
the revolution has either been a Socialist govern- 
ment or one sustained by Socialist consent, express 
or implied. Now the operations carried on by 
Stinnes and his colleagues in industry are exactly 
those which the socialists say prepare the way for 
their order of things. They admit that they can- 
not take over and manage a host of petty business 
concerns with any'degree of efficiency or success, but 
they do contend that when the industrial capitalist 
has brought a business to a certain degree of "ma- 
turity" it is ripe for "socialization." Therefore 
they welcome the establishment of horizontal and 
vertical combinations and do all that they can to 
smooth the path for the organizers of gigantic en- 
terprizes. Moreover the system of workers' coun- 
cils and economic councils, authorized by the Ger- 
man constitution of 19 19, was created with the 
thought that they would bring about intelligent co- 
operation in German industries, educating working- 
men in their sphere and capitalists in their domain, 
and preparing the way for a highly efficient produc- 
tive organism. 

Indeed this course is openly favored by a large 
and important school of economic thinkers, among 
whom Walther Rathenau and Rudolph Wissel rank 
high as leaders. This school accepts as inevitable 
and as conducive to productive efficiency the system 
of "collective" as opposed to private economy. 
Their ideas are summed up in the word Planwirt- 



ECONOMIC OUTCOME OF THE WAR 129 

schaft, national economy scientifically planned in the 
collective interest. While he was minister of 
Public Economy, Herr Wissel laid before the coun- 
try the outlines of such a scheme. There was to 
be a system of economic and labor councils organ- 
ized to cooperate in the stimulation of industry. 
Certain great branches of economy, such as coal, 
potash, and electricity, were to be brought under the 
supervision of the government. The state was to 
take a larger and larger part of the profits of great 
industrial enterprises, in the form of stocks and 
bonds of the various companies. The industrial 
securities held by the state were not to be adminis- 
tered by a political officer but by a state bank con- 
ducted on business principles. Large funds thus ac- 
quired were to be used by the government to give 
employment to German workingmen. The cost of 
living was to be held down by eliminating the mid- 
dlemen and distributing a part of the wages in the 
form of material goods. The right to strike was 
to be closely restricted in important industries by re- 
quiring a nine-tenths vote of the employees to close 
a shop.. Finally there was to be an economic minis- 
try free from political control. 

This scheme, which made a great sensation when 
it was announced under important auspices, aroused 
an intense opposition on the part of the capitalists 
and the socialists. It went too far for the former 
and not far enough for the latter. Planwirtschaft 
still remains on paper, but it is the center of a lively 
and continuous discussion. Modified in some re- 



130 CROSS CURRENTS IN EUROPE TO-DAY 

spects and enlarged in others, it gains steadily in 
popular support. Capitalists know that they can- 
not absolutely ignore organized labor and the 
socialists. Labor leaders are aware of the services 
rendered by the initiative and organizing power of 
the new capitalists. Both parties know that the 
crude and naked exploitation of the public through 
monopolies over primary materials is likely to bring 
about a dangerous situation. So Planwirtschaft is 
the order of the day — in discussions. Meanwhile 
German business strides forward in its seven league 
boots. 

On all sides, German business men aided by the 
government have labored to restore their export 
business. The ink on the peace Treaty was hardly 
dry before there was formed a Dutch-Hanseatic 
League with its seat at Hamburg. This was fol- 
lowed the next year by a treaty with Holland which 
brought an advance loan of one hundred and forty 
million florins to German industries. German busi- 
ness with Switzerland and the Scandinavian coun- 
tries leaped forward when the blockade was lifted. 
In 1920 Germany concluded commercial treaties 
with Hungary, Czechoslovakia, and Austria. In 
that year, the Czechs bought half of their foreign 
goods from the Germans and sold almost half of 
their exports to them. The next year a commer- 
cial treaty was concluded with Bulgaria, and Ger- 
man merchants began the restoration of their eco- 
nomic hegemony in the Balkans. At the same time 
an agreement was reached with Russia; there was an 
exchange of commercial delegations, with diplomatic 



ECONOMIC OUTCOME OF THE WAR 131 

immunities, charged with the duty of resuming trad- 
ing relations. 1 A German charge d'affaires was 
sent to Moscow to promote friendly intercourse. 
The Hamburg-American Company and the commer- 
cial delegates of Russia formed at Berlin a Russo- 
German corporation to handle the purchase of rail- 
way and steamship materials for the Soviet govern- 
ment. Agents of the Krupp works, now engaged 
in making agricultural implements and other ma- 
chines of peace, hurried to Chili while those of the 
Kloeckner combination reopened their branches in 
Argentine. In June, 192 1, a commercial treaty 
was negotiated with China and the branches of the 
Deutsche Bank were opened again in that country. 
The wayfarer in the streets of London who turned 
from the Veterans of the World War rattling tam- 
borines and begging in the streets to inspect the 
shop windows could see for sale toy moving picture 
machines bearing that ominous sign "Made in Ger- 
many." 

While German capitalists have been driving ahead 
with the support of a semi-socialist government, 
England, the classic home of free trade and laissez 
faire has been swinging steadily in the direction of 
state capitalism with its usual concessions to labor in 
the form of pensions, unemployment insurance, and 
similar measures. In 19 16, while the Great War 
was still raging, the leading British manufacturers, 
looking forward to the trade war after the war of 

1 The treaty between Germany and Russia announced at 
Genoa in April, 1922, merely helped along a process already 
under way. 



132 CROSS CURRENTS IN EUROPE TO-DAY 

arms, formed a powerful Federation of British 
Industries. Two years later, the British Manu- 
facturers' Corporation, a great trade association, 
united with the Federation; and the consolidated 
society, working in close cooperation with the gov- 
ernment, sent business agents to search for trade in 
the uttermost parts of the earth. In that very 
year, 19 18, a new branch of the British Govern- 
ment, the Department of Overseas Trade, was 
created to press British commercial interests in 
foreign and colonial markets. With this Depart- 
ment were associated many British industrial leaders 
in an advisory capacity. The next year, the land of 
Cobden and Bright adopted a great system of pref- 
erential tariffs. Mr. Culbertson, of the Ameri- 
can Tariff Commission, is quite right when he speaks 
of signs marking "a return by Great Britain to the 
policy of colonial exclusion which we had hoped had 
passed with the harsh days of mercantilism." 

France follows steadily in the same path. Most 
of the war sentiment and rhetoric have been dissi- 
pated. France is now the second colonial power of 
the world and one of the first investment banking 
countries. Books are flowing from the French 
press recalling the ancient commercial rivalry be- 
tween England and France — the rivalry that kept 
Europe in war for almost two hundred years and 
died down for a time in the presence of the greater 
German menace. The drift of French tariff policy 
is toward a closed colonial union. The French gov- 
ernment works hand in hand with French bankers 
and industrialists in their search for new markets. 



ECONOMIC OUTCOME OF THE WAR 133 

A very large French party dreams of the day when 
France may hold that dominant position in Europe 
and in world trade which Germany strove for and 
missed. What nation on the globe dares to throw 
the first stone at France? 

Certainly the United States lives in a glass house. 
Our huge industrial and banking corporations are 
driving hard in every market. Our government 
modifies its anti-trust laws to give them free sway 
in other lands. Our government builds an immense 
merchant marine at the expense of the tax payers, 
turns it over to private operating companies, and 
now proposes endless millions in the way of sub- 
sidies. Our government, finding our Eastern trade 
menaced, calls a world conference and by brilliant 
negotiation forces England and Japan apart and 
compels the reaffirmation of the open door for 
China — which means in essence, better opportuni- 
ties for American trade in China. Our govern- 
ment, with its navy and marines, helps our invest- 
ment bankers collect their debts in the Caribbean. 
Our government gives diplomatic support to finan- 
cial and commercial enterprises everywhere on the 
face of the earth. Foreign affairs relate principally 
to investments, trade, iron, coal, oil, copper, and 
rubber, and other raw materials. 

Take a single example, the contest for new oil 
fields now raging among the governments of the 
world. As a result of a technical revolution, not 
less important than that introduced by gunpowder 
and the steam engine, petroleum has become a basic 
raw material as essential to modern industrial and 



134 CROSS CURRENTS IN EUROPE TO-DAY 

commercial enterprise as coal and steel. Crude oil 
furnishes more heat per identical volume than coal. 
It requires fewer men in the boiler room. It is 
cheaper to use. It occupies less space. It is easier 
loaded. It leaves more room for freight for it 
saves about thirty per cent of the space. Merchant 
ships equipped with oil burning boilers can readily 
outstrip those that rely upon coal for fuel. The 
mistress of kerosene will become the mistress of the 
seas. Petroleum will rule the waves. 

For the fighting marine, the revolution is still 
more important. The oil burning battleship has a 
far larger cruising radius and is less dependent upon 
coaling stations. The space saved by installing the 
oil apparatus, permits an increase in the weight 
and range of the guns used. Our Superdread- 
noughts, the Nevada and Oklahoma, can outcruise 
and outshoot anything now upon the seas. The 
ships of the pre-oil age belong to the wooden hulks 
of Nelson's time. 

War on land, as war on sea, has become an oil 
war. Tanks, airplanes, automobiles, and trucks de- 
pend upon oil. Paris was saved in 19 14 by the 
fleet of automobiles that carried the new fighting 
units to attack the Germans from the west. Ver- 
dun was saved by the trucks which supplied men and 
materials after the railways and yards were bombed 
out of existence. Lord Curzon said at the close 
of the war: "Without oil how could we have pro- 
cured the mobility of the fleet, the transport of our 
troops, or the manufacture of several explosives? 
How could we have carried out the necessary trans- 



ECONOMIC OUTCOME OF THE WAR 135 

port of men and ammunition to the various theatres 
of war? All the products of oil, gas oil, aviation 
spirit, motor transport spirit, lubricating oil, .etc., 
played an equally important part in the war; in fact, 
I might say that the Allies floated to victory on a 
wave of oil." 

Owing to the high development of the American 
industry, the creation of a vast merchant marine, 
and the growth of the navy, the United States actu- 
ally threatened to dislocate for the first time since 
the battle of the Armada the sea power of the 
world. England's battle fleet and commercial fleet 
rested upon coal, of which the British Isles furnish 
an abundant and excellent supply. England's sea- 
power was built upon well planned and distributed 
coaling and naval bases in all parts of the world. 
Oil, at one blow, broke up the perfection of this 
grand network for commerce and war. It became 
necessary for England to reorganize in haste her 
fuel technique and to cast about for future supplies 
in all parts of the world. 

British commercial leaders, strongly supported by 
their government, set to work vigorously on their 
appointed tasks. They operated through the chan- 
nels of diplomacy and imperialism and through the 
Shell Transport Company, the Pearson-Mexican 
Eagle Company, and the Royal Dutch Company. 
The results were astounding. To-day, England has 
recovered her toppling balance and remains as be- 
fore mistress of oil and water. She has two-thirds 
of the improved fields of Central and South 
America and most of the concessions; she has two- 



136 CROSS CURRENTS IN EUROPE TO-DAY 

thirds of the holdings in the Caribbean, and owns 
or controls interests in every oil field on the five 
continents and the islands of the seas. In this oil 
empire France has a province. By an agreement 
made at San Remo on April 24, 1920, the two coun- 
tries distributed the visible and potential oil supply 
of the world between them, England getting the 
lion's share. 

This places the United States with its great navy 
and merchant marine in a difficult position because, 
owing to the high rate of consumption reached in 
this country, the drain upon the available oil supply 
will exhaust our resources within a relatively brief 
space of time. English leaders in oil have discov- 
ered this. One of them, Sir Edward Mackay 
Edgar, Bart., speaking of the superior position of 
his country in this respect, recently remarked: 
"We shall have to wait a few years before the full 
advantages of this situation shall begin to be reaped, 
but that the harvest eventually will be a great one 
there can be no manner of doubt. To the tune of 
many million pounds a year, America before long 
will have to purchase from British companies and to 
pay for, in dollar currency in progressively increas- 
ing proportion, the oil she cannot do without and is 
no longer able to furnish from her own store. I 
estimate that if their present curve of consumption, 
especially of high grade products, is maintained, 
Americans in ten years will be under the necessity of 
importing 500 million barrels of oil yearly at $2 
a barrel — a very low figure — and that means an 
annual payment of $1,000,000,000 per annum, most, 



ECONOMIC OUTCOME OF THE WAR 137 

if not all, of which will find its way into British 
pockets." 

The government of the United States, or rather 
the executive branch, was quick to discover the 
dilemma in which it had been placed by English op- 
erations in oil. In a report transmitted from the 
State Department to the Senate on May 17, 1920, 
the policies of the English government were brought 
under review and a protest was lodged against them. 
The President of the American Petroleum Institute 
shortly afterward hinted in an important address 
that these policies were "not in the interests of the 
future peace of the world." To this voice of pro- 
test and warning Mr. Franklin K. Lane, then Secre- 
tary of the Interior, added his significant query: 
"Do such proceedings lead to peace or war?" 

This protest, for the moment at least, was un- 
heeded. Sir Edward Mackay Edgar, speaking of 
English supremacy and American objections, stated: 
"The United States experts have been well aware of 
this situation for more than a year. But Congress 
and public opinion were not on their guard. The 
public at large, convinced that America is an im- 
mense reservoir of petroleum and never having seen 
its engines stop for want of oil, took it for granted 
that petroleum is a product which grows naturally, 
like apples on apple trees. Unfortunately for them 
— fortunately for us — their eyes have been opened 
too late." 

It may be however that the note of triumph is pre- 
mature. England and France, it is true, have ar- 
ranged between them a division of the world's oil 



138 CROSS CURRENTS IN EUROPE TO-DAY 

supply. They have agreed on the methods of 
financing, piping, and handling the business. They 
contemplate reaping a generous harvest of profits 
at the expense of their less fortunate rivals. But 
if this pressure is too strong, it may force a re- 
alignment of industrial powers. It is not probable 
that the great nations will silently acquiesce in the 
accidents of fortune and pay an unlimited tribute 
to the masters of oil. Indeed, early in 1922, Eng- 
land made some concessions to American pros- 
pectors in the Near East and a satisfactory adjust- 
ment of the whole business was promised. Never- 
theless, the affair illustrates the intimate connection 
between government and business, which has such 
a fateful bearing upon international relations. 

If the last World War grew mainly out of com- 
mercial rivalry, and the weight of authority supports 
that view, and if we now see signs of a more intense 
rivalry than ever supported by all the powerful 
agencies of government, what then shall we say of 
the future, of the restoration of Europe, of a world 
safe for democracy, of a chastened and enlightened 
mankind? In the restrained language of Mr. Cul- 
bertson, speaking in the fullness of his knowledge as 
a member of the Tariff Commission, "if no stay 
is given to the discriminatory and exclusive prac- 
tices which now mark the policy of almost every im- 
portant nation, we shall go forward into a period of 
trade war and conflict from which we shall look back 
even upon the conditions of this day as the happy 
state of a golden age from which we fell." 

Therein seems to be the inexorable logic of the 



ECONOMIC OUTCOME OF THE WAR 139 

European problem. A new constitution of nations, 
a grand European league, appears to be the only 
alternative to new combinations, new wars more 
ghastly and deadly than ever. It is, however, 
another thing to say that the United States, enjoying 
the comparative security of this hemisphere, should 
attempt to take part in the conduct of a cooperative 
system for all the nations of the earth. Certainly 
there is nothing in the present state of Europe that 
gives promise of a successful outcome, even if Amer- 
ica had the courage and the will. Perhaps if we 
get enough billions invested in Europe we may take 
a practical interest in the establishment of a con- 
stitution of law and order for her teeming millions; 
but a constitution without an army is only a shadow 
of power. 



THE NEW CONSTITUTIONS OF EUROPE 

r B 1 O the outward eye, the great Austro-Hunga- 
M. rian, German, and Russian empires, on the eve 
of the World War, presented a solid front that re- 
called the substantial masonry of old Roman days. 
Pomp, ceremony, and circumstance attended upon 
the rulers of these mighty states as upon Augustus 
and Constantine. There were, of course, nationalist 
rumblings in Austria-Hungary and socialist declama- 
tions in Russia and Germany, but few there were 
who dreamed that these solid monarchical structures 
could ever be pulled down. Still fewer were there 
who imagined that the time was not far distant when 
all three of them would be lying in the dust. Each 
of the sovereigns had an army, numerous, well- 
equipped, and sternly disciplined, ready to march 
to death at his orders. Police and secret agents 
searched out despised revolutionaries and hustled 
them to prison or exile. Those who ventured to 
criticise the majesty of the sovereign, except possibly 
in Austria, were in peril of the law's penalties. 
Nicholas II and William II, in language befitting 
James I or Louis XIV, spoke with assurance of their 
heritage from Almighty God whose lieutenants 

they were on earth. A few cynics laughed, but the 

140 






NEW CONSTITUTIONS OF EUROPE 14I 

solemn-visaged press echoed official sentiments with- 
out question. The monarchs seemed secure in the 
affections of their people; a royal procession through 
the streets was always the signal for a dem- 
onstration and a royal marriage for a na- 
tional festival. When the Kaiser celebrated 
the twenty-fifth anniversary of his coronation, even 
the socialist organ, Vorwarts, spoke gently of his 
Royal and Imperial Majesty, merely regretting that 
he had associated himself with the reactionaries. 
Not long afterward a distinguished American Uni- 
versity president, profoundly moved by a visit to 
the Kaiser, declared in a burst of enthusiasm that, 
if Germany were a republic, a grateful people would 
elect William of Hohenzollern to fill the office of 
chief executive. And now, how the mighty have 
fallen! 

If constitutions represent accomplished facts, then 
divine right and privileged classes are dead in 
Europe. Some echoes of the old order may be 
heard in out-of-the-way places, but for vast masses 
of Europe, kings and ruling aristocracies are sym- 
bols of a regime that has passed away. All the 
states that have arisen from the ruins of the three 
great empires are republics: Germany, Austria, 
Finland, Esthonia, Latvia, Lithuania, Soviet Rus- 
sia, and Czechoslovakia, not to mention anomalies 
like Georgia and Azerbajian and Hungary. Ru- 
mania and Jugoslavia, enlarged by additions from 
the former Austro-Hungarian empire, retain their 
monarchs, but under constitutions marked by the 
outward signs of democracy. Everywhere, even in 



142 CROSS CURRENTS IN EUROPE TO-DAY 

Hungary, it seems, chambers of peers speaking for 
great landlords have been swept away. "Privileges 
or discriminations due to birth or rank and recog- 
nized by law are abolished," run the words of the 
new German constitution. "There is one citizen- 
ship in the whole kingdom and all citizens are equal 
before the law," proclaims the Jugoslav constitution. 
By one of the strangest paradoxes of history, the 
Great War which was supposed to demonstrate the 
supremacy of the supreme masculine virtue — valor 
in battle — has marked the triumph of feminism in 
politics. It is true, the woman movement was well 
under way before the conflict began, but instead of 
being checked by war it was actually accelerated. 
Nearly all the new constitutions grant suffrage to 
women, and several of the old constitutions have 
been amended to the same effect. During the past 
few years the vote has been given to women in 
Austria, Czechoslovakia, Denmark, England, Estho- 
nia, Finland, Germany, Latvia, Lithuania, the Neth- 
erlands, Norway, Poland, Sweden, and the United 
States. Of the great powers that took part in 
"the war for democracy," England and Russia have 
made suffrage universal. France and Italy alone re- 
main obdurate. The German constitution, while 
establishing political equality, adds a sweeping 
declaration to the effect that "men and women have 
fundamentally the same civil rights;" that "mar- 
riage is based on the equal rights of both sexes"; 
and that "all discriminations in civil service are 
abolished." Divine right is dead. Though there 






NEW CONSTITUTIONS OF EUROPE 143 

may be restorations, the solid structure of auto- 
cratic rule is badly shattered. The economic and 
social foundations of the old order have been swept 
away. 

In examining the results of this great cataclysm, 
for such it truly was, one cannot help comparing 
them with the outcome of the French revolution 
more than a hundred years ago. Until 19 18, the 
written constitutions of Europe were founded on 
the classic model shaped by the authors of the Decla- 
ration of the Rights of Man. Complex as these 
many constitutions were one deep note ran through 
them all. That note is usually summed up in the 
words laissez faire. The individual owes obliga- 
tions to the -state, but beyond national defense and 
the maintenance of public order, the state owes no 
positive duties to the individual. On the contrary, 
that state is best which governs least and interferes 
least with individual affairs. The rights of private 
property and of free contract are inviolate, save 
when due compensation is made for infringement. 
There were, of course, many modifications of this 
rigid doctrine under theories of public welfare and 
what Americans call the "police power," but such 
modifications were for the most part restricted in 
character. The new doctrines of social solidarity 
and social service had made little impression on 
formal constitutional law by the year 19 18. Judg- 
ing by the written word of the constitutions the 
world still stood in the year 1789. 

Under the pressure of many influences, most of 
them socialistic, the constitutions created during the 



144 CROSS CURRENTS IN EUROPE TO-DAY 

revolutions of our day have introduced a new con- 
cept of the relation of the citizen to the state. 
What Herbert Spencer called " the coming slavery" 
has almost arrived. The Russian constitution says 
nothing about the "rights of man." It proclaims 
only the "rights of laboring and exploited people." 
There is a grand flourish about "the rights of all 
citizens irrespective of their racial or national con- 
nections," but this is immediately offset by a pro- 
vision that the Soviet Republic "deprives all 
individuals and groups of rights which may be 
utilized by them to the detriment of the socialist 
revolution." The rights of private property, in- 
stead of being guaranteed, are destroyed. The 
obligation to work is laid upon all citizens and there 
is embodied in the text of the fundamental law the 
ancient injunction : "He that will not work, neither 
shall he eat." There is to be a free press and the 
right of public meetings is announced, but only 
for "the working people and the poorest peasantry." 
The right to bear arms is mentioned, but it is limited 
to the toiling masses. The propertied class is ex- 
pressly disarmed. Although universal military serv- 
ice is prescribed, "the honor of defending the revo- 
lution with arm's is accorded only to the workers, 
and the non-working elements are charged with 
the performance of other military duties." The 
state, instead of being a mere police constable 
charged with keeping order and protecting property, 
becomes the master of all economic and intellectual 
life. Under its iron rule, all must operate. 
The other constitutions produced in our revolu- 



NEW CONSTITUTIONS OF EUROPE 145 

tionary times, bear no such heavy impress of the 
proletarian hand; yet all of them show marked 
traces of the socialist concept of society. Indeed 
there is a curious blending of the old and the new. 
The rights of man flow steadily into the duties of 
man. In the German constitution we can pick out 
the very words ins-erted by the advocates of doc- 
trines diametrically opposed. The laissez faire 
school was in the convention with its gospel of 
economic liberty. This is what it got when it had 
finished with the Social Democrats and the Catho- 
lic party: "The regulation of economic life must 
conform to the principles of justice, with the object 
of assuring humane conditions for all. Within these 
limits the economic liberty of the individual shall 
be protected." Freedom of trade and industry is 
guaranteed, but only "in accordance with the na- 
tional laws." While freedom of contract is as- 
sured, that freedom is restrained "in accordance 
with the laws." The right of private property is 
proclaimed, but "its nature and limits are defined 
by law." When private property is taken for pub- 
lic purposes, there shall be compensation and due 
process, only "in so far as not otherwise provided 
by national law." Inheritance is made secure, but 
"in accordance with the civil law." The clause 
that exalts property rights declares that they 
"imply property-duties. Exercise thereof shall 
at the same time serve the general wel- 
fare." The owner of the soil is required 
to cultivate and use it, and any increment not 
due to new labor and capital accrues to the com- 



146 CROSS CURRENTS IN EUROPE TO-DAY 

munity. Provision is made for the "transfer to 
public ownership of all private business enterprises 
adapted to socialization." The rights of labor 
organizations are made as secure, if not more se- 
cure, than the rights of capitalist corporations. 
Labor is not only recognized by the constitution; 
the organization of labor to participate in the 
control of industry is expressly provided for in an 
elaborate separate article. 

Society is no longer viewed as a mere aggrega- 
tion of individuals struggling with one another for 
wealth and power, protected in their possessions by 
the state, and without claims of right upon the com- 
munity. In the light of the new constitutions, 
"duty" and "service" are the watchwords of con- 
stitutional law as well as "rights" and "privileges" 
and "immunities." The state, born of power, jus- 
tifies itself by the discharge of social obligations. 
As the able French commentator, M. Brunet says, 
of the German constitution, the old doctrine of 
laissez faire has disappeared and for it there has 
been substituted the concept that man while enjoy- 
ing a certain number of individual rights, "must 
place them at the service of the collectivity." He 
goes on to add that "in whatever concerns liberty, 
strictly speaking, property, the intellectual develop- 
ment of man, or the means of production, there is 
found everywhere this dominant idea of the social 
function of man. Individual liberties are no longer 
an end in themselves, nor do they constitute any 
longer an independent good. They are limited 
and conditioned by the duty of the individual to 



NEW CONSTITUTIONS OF EUROPE 147 

cooperate in the well-being and development of the 
community. They have no value and are not pro- 
tected except in the measure that they serve in the 
fulfillment of this social duty." This is not only 
true in Germany where a fusion of socialist and 
Prussian ideals has exalted the state. It is true 
in the other countries of eastern Europe, even those 
that are more largely agrarian than the German 
republic. How far these new concepts will affect 
political practice and political ethics the future alone 
can determine, but there they stand to challenge 
the whole gospel of the French revolution. 

For Americans especially and for all students of 
politics who once thought that the remedy for the 
disease of centralization and bureaucracy was of- 
fered by the federal system, the new German con- 
stitution will have a particular interest. During 
the old regime commentators never wearied of 
pointing out the rights of states and emphasizing the 
separatist tendencies, particularly in South Ger- 
many. Many of them flatly declared that sover- 
eignty was not in the German people but in the 
Bundesrat composed of representatives of the princes 
and the cities. Some Frenchmen were wont 
to think of the South German states as ready at 
almost any time to break the bond that bound them 
to Prussia. In the structure and operations of the 
old system, the principle of federalism was every- 
where applied. The Bundesrat, which corresponded 
in a way to our senate, consisted of delegates from 
the states and cities, and it enjoyed in the making 
and enforcement of laws powers far in excess of 



148 CROSS CURRENTS IN EUROPE TO-DAY 

those given to the Reichstag or lower chamber. 
The representatives of the states in the Bundesrat 
were in fact ambassadors acting under instructions 
from their home governments and the delegates of 
each state were compelled to vote as a unit. The 
Bundesrat alone could declare war and in practice 
it alone initiated all the important projects of legis- 
lation. In administration, civil and military, its 
powers were important and far-reaching. In ad- 
dition to the impress of states' rights on the struc- 
ture and functions of the national government, cer- 
tain of the states had special prerogatives, extending 
in some instances to the appointment and reception 
of ambassadors and ministers. There were, it is 
true, powerful centralizing forces at work in the old 
order, but federalism was deeply rooted in the en- 
tire political structure. 

This system was vigorously attacked in the Ger- 
man constitutional convention. Some of the dele- 
gates went so far as to adyocate the complete de- 
struction of the states as such and the establishment 
of a unitary system like that of England or France. 
While these extremists did not prevail, little was 
left of the rights and dignities of states when they 
got through with their work. In the course of the 
revolution several of the smaller states combined; 
and the new national constitution made provision for 
additional unions and for changes of boundaries. 
The frontiers of the states were made mobile with 
the consent of the populations affected. While a 
republican form of government and universal suf- 
frage were imposed upon them, the states were so 



NEW CONSTITUTIONS OF EUROPE 149 

reduced in power that they may be said to exist 
merely on sufferance. For practical purposes the 
division of legislative power between the states and 
the federal government is gone. The latter is su- 
preme. A national council, which takes the place 
of the old Bundesrat, is mocked by the mere shadow 
of authority. The idea of giving equal representa- 
tion in the upper chamber to states as geographic 
entities, such as prevails in the United States, is 
utterly rejected. It is true that the members of the 
new Reichsrat are not apportioned among the states 
exactly on the basis of population, but any discrimi- 
nation that remains is offset by the fact that the 
Reichsrat is little more than an advisory council. It 
is not an upper chamber. It does not have equal 
legislative rights with the national parliament. It 
has none of the administrative powers of the former 
Bundesrat. It is a chattering ghost of former fed- 
eralism. The government of Germany is based 
upon population; not on geographical and historical 
reminiscences. For practical purposes Germany 
might as well be a unitary state. 

While discarding the ancient doctrine of inalien- 
able individual rights and federalism along with 
it, the new constitution makers of Europe, have also 
refused to follow the American model in shaping 
the structures of their governments. Our presi- 
dential system is everywhere deliberately rejected as 
conferring powers too regal and too extensive upon 
one man — upon a single officer who cannot be called 
to account, during his term, by the voters of the land. 

The American concept of a senate as representing 



150 CROSS CURRENTS IN EUROPE TO-DAY 

the federal principle and embodying the idea of a 
conservative balance in the government is likewise 
put aside by the new architects. Some upper cham- 
bers are left standing, it is true, but they possess no 
such prerogatives as those enjoyed by the senate that 
sits at Washington. The Germans were so afraid 
of secret treaties and secret diplomacy that they 
wrote this special clause in their constitution : "The 
national assembly shall appoint a standing committee 
on foreign affairs which may act outside of the sit- 
tings of the national assembly and after its expira- 
tion or dissolution until a new national assembly 
convenes." This committee is given the great pow- 
ers conferred upon committees of investigation. 
The American idea that a judicial court can better 
interpret the will of the people as expressed in the 
constitution than a legislative body has not found 
general acceptance. One of the new republics, 
Czechoslovakia, has adopted it, but for very special 
reasons. Thus the pendulum in the great clock 
tower of time swings forever forward and back be- 
tween liberty and obligation; between the individual 
and the state. Perhaps it will never come to rest. 
Descending to particulars, we may take note of 
the fate which the American presidential idea met 
at the hands of the new draughtsmen. The new 
republics have titular heads who in some instances 
are called presidents; but when we pass beyond ver- 
biage to reality we find that there is no resemblance 
to the American concept. Europe has adopted par- 
liamentary, not presidential, government. This is 
not an accident. Neither is it due to ignorance of 



NEW CONSTITUTIONS OF EUROPE 151 

American experience. On the contrary, the whole 
problem was thoroughly discussed in all its bear- 
ings, especially in Germany. "Many Germans," 
says Brunet, the French commentator, "wished to 
establish a chief of state who could act and repre- 
sent the state with the independence and authority 
of a Wilson, but their view did not prevail." The 
Independent Socialists, at the other end, fearing a 
Bonaparte, strenuously opposed the presidential 
system. They said that the president must either 
govern in accord with the wishes of the people as 
expressed by ministers responsible to the parlia- 
ment, or become substantially an autocrat during his 
tenure of power. In the first case, they added, he 
would be useless; and in the second case danger- 
ous. For this reason the Independents did not 
want any president at all, but merely a council of 
responsible ministers. 

Between these two extremes lay the final compro- 
mise. The German president, unlike the French 
president, is not elected by the national legislative 
bodies in joint session. He is elected by the people. 
He has large powers but practically all of them are 
exercised through ministers responsible to the par- 
liament. There are a few instances in which he 
may act on his own initative in collaboration with 
the voters. Under no circumstances can he exer- 
cise such regal powers as those enjoyed by the 
chief executive of the United States. When, for 
example, there is a deadlock between the two houses 
of the legislature, he may intervene but only to 
submit the law in controversy to a popular referen- 



152 CROSS CURRENTS IN EUROPE TO-DAY 

dum. The German president does not have an in- 
dependent veto power such as that enjoyed by our 
president. He may however place a check upon leg- 
islation by referring any bill to the voters for de- 
cision. 

Thus it will be seen that the Germans sought 
to carry out a very definite idea. They saw that 
a president elected by the legislature could not fail 
to become a figure-head or subservient to the body 
that elected him. So they provided for popular 
election. Thus the idea of the check and balance 
system is introduced; but neither the executive nor 
the legislative department is set free to exercise its 
powers for a term of years uncontrolled by popular 
scrutiny. The president may check the legislature 
by submitting its proposals to a referendum. Even 
in this -case the legislature is not without recourse 
against autocratic action. The Reichstag may pro- 
pose the recall of the president and submit it to 
the people. If he is rejected at the polls he goes 
out of office. If the ballot is in his favor the 
Reichstag is automatically dissolved. 

So a new experiment in popular government is 
made. The Germans have attempted to create "an 
executive strong enough to form a counterweight 
to the legislature and to control the latter in the 
name of the people without giving him a power so 
great that he may override, transcend, or destroy the 
rights of parliament and institute an anti-democratic 
regime." In short the Germans reject the presi- 
dential system without instituting a pure form of 
parlimentary government. They have created what 



NEW CONSTITUTIONS OF EUROPE 153 

may be called a "hair-tngger" government. In 
theory, at least, it is easy to force a submission of 
contested issues to popular vote. Whatever may 
be said of this, it cannot be denied that it represents 
democracy in an extreme form. The reaction which 
such a proposal would call forth in conservative 
circles in the United States can readily be imagined. 
Nevertheless, there is a point that is often over- 
looked : it is minorities not majorities that are radi- 
cal. 

While parliamentary, not presidential, govern- 
ment prevails in Europe, changes have been intro- 
duced in the representative idea. In the classical 
homes of representative government — England and 
the United States — democracy was working all 
through the nineteenth century toward a standard 
based on Rousseau's formula that sovereignty is 
in the people and that all heads are equal and for 
political purposes of the same value. This meant 
that the number of members of any particular legis- 
lature should be apportioned among geographical 
districts approximately according to the number of 
inhabitants without reference to their wealth, their 
occupations, or their peculiar interests. All repre- 
sentatives were to be elected by majorities or plurali- 
ties as the case might be. Minorities, no matter 
how large or important in the economy of the state, 
had to go without their spokesmen in the government 
that taxed them and interfered with their affairs. 
There were, it is true, exceptions to the rule and the 
principles were not always applied with mathemati- 
cal precision; but broadly speaking this was the 



154 CROSS CURRENTS IN EUROPE TO-DAY 

concept of representative democracy accepted as 
axiomatic — as representing the final stage in many 
centuries of political evolution. 

No one can run through the political writings 
that appeared in the two hemispheres during the dec- 
ade previous to the Great War without being struck 
by the critical note. In parliaments and outside 
there were lively debates over "the failure of repre- 
sentative government." This was the one thing on 
which conservatives and radicals agreed. In Europe 
a large number of influential publicists, of varying 
political tendencies, challenged the whole system of 
artificial territorial districts and numerical major- 
ities. They declared that the doctrine of abstract 
political equality was false and in plain contradiction 
to the facts of modern life. That was not all. They 
asserted that in practical operation it was a menace 
to society. It placed the management of difficult 
and technical public affairs in the hands of politicians 
who, by the force of circumstances, had to be phrase- 
makers, rhetoricians, and "brokers in opinion." 
Inasmuch as anyone of the politicians, in order to 
accumulate the majority necessary to election, had 
to command the suffrages of electors holding widely 
divergent views, he could not escape the necessity 
of employing double-meaning terms and making 
vague promises. Such being the necessities of poli- 
tics under the old system, it followed that practical 
men, men of affairs, could not hope to be elected 
themselves and were compelled to entrust the busi- 
ness of the state to orators whose stock in trade 
was high-sounding rhetoric. Such was the indict- 



NEW CONSTITUTIONS OF EUROPE 155 

ment brought against the gospel of Rousseau by 
those publicists accustomed to cry "a plague on both 
your houses." 

When called upon for their remedy, the critics of 
representative government made this answer. They 
pointed out that until the modern democratic age, 
representation had in point of fact been based upon 
the idea of drawing into the work of government 
men from every class, order, or estate. The old 
French national assembly represented the clergy, 
nobility, and the third estate. The Swedish parlia- 
ment, until 1866, spoke for the nobility, clergy, 
burghers, and peasants. The English parliament 
from mediaeval times until the advent of democracy 
represented the nobility, clergy, landed gentry, and 
the burgesses. The remedy for Rousseau's disease, 
the critics said, was to apply again the old idea in a 
new form and summon to the management of public 
affairs the representatives of industry, commerce, 
business, professions, crafts, and other orders of 
society. 

When they were called upon, however, to elabor- 
ate their scheme, the critics found considerable em- 
barrassment. The old rules of law that sharply di- 
vided society into economic classes had disappeared; 
and while it was easy to show from the census re- 
turns that there were so many peasants, so many 
merchants, and so many workingmen, it was impos- 
sible to draw the lines between them and to force 
all of them into a few distinct economic categories. 
Moreover, it was extremely difficult to work out any 
distribution of representatives among the various 



156 CROSS CURRENTS IN EUROPE TO-DAY 

orders that would be generally acceptable. For 
various reasons no practical attempts were ever 
made to reestablish representative government 
along occupational lines. Advocates of propor- 
tional representation argued, however, that 
their proposal allowed citizens to group themselves 
naturally and voluntarily according to their voca- 
tional interests, if they so desired, without at the 
same time introducing rigid class divisions or vio- 
lating the accepted principle of political equality. 
Debate over representative government was in 
a purely academic stage when revolution broke in 
upon mankind in 19 17 and 19 18. Owing to pecu- 
liar circumstances, the revolution both in Russia and 
Germany took a course that had a direct bearing 
upon the idea of representation. In both countries 
in the first instance, power was seized by provisional 
governments when the old regime collapsed. This 
was true to form, for democratic revolutions had 
usually proceeded along a similar course. The next 
step would have been a national assembly of some 
kind to begin the new legal order. In Russia, how- 
ever, the provisional government created by the 
first revolution showed no particular hurry in ap- 
pealing to the people, and before it got a national 
assembly in working order it was overthrown by a 
radical party which completely rejected political 
democracy of the old type. Indeed side by side 
with the provisional government there had existed 
from the first days of the revolution in Russia a 
soldiers, peasants, and workers council speaking in 
the name of these interests and sharing the sover- 



NEW CONSTITUTIONS OF EUROPE 157 

eignty of the state. This was the organ which the 
Bolsheviki used. Bent upon an economic revolution, 
they declared that the end justified the means and 
so they cast aside representative government of the 
old type and instituted class government operating 
through an elaborate system of peasants and workers 
councils. Putting the economic revolution first they 
chose the means which they deemed best fitted to 
realize it — namely the dictatorship of the prole- 
tariat. They thrust aside parliamentary govern- 
ment and majority rule — those "bourgeois devices," 
as they were pleased to term such instruments of 
political democracy. To this day they have man- 
aged to hold to power by methods so well known as 
to call for no comment. 

In Germany as in Russia, the revolution was ef- 
fected through the agency of soldiers and workers 
councils which sprang up like magic in the industrial 
cities during the early day? v>i November, 19 18. 
This uprising was undoubtedly engineered by the In- 
dependent Socialists whose leader, Ernest Daumig, 
had visited Moscow and studied the methods of the 
Bolsheviki on the ground. So powerful did the 
workers and soldiers council become in Berlin that 
the provisional government of Social Democrats, to 
whom Prince Max turned over the reins of author- 
ity, had to come to terms with the extremists. 

For a time the control of affairs was vested in the 
hands of a joint committee representing the two 
wings of socialism, one of which openly advocated 
following the Russian example with modifications. 
For a few weeks these two factions in common coun- 



158 CROSS CURRENTS IN EUROPE TO-DAY 

cil wrangled and debated, the Independents seeking 
to postpone indefinitely the calling of a national as- 
sembly elected on the basis of universal suffrage. 
In the end the conservative wing triumphed. On 
December 19, 19 18, at a convention of delegates 
from the councils that had risen in all parts of Ger- 
many, it was decided to summon a national assembly 
to determine the future constitution of Germany. 

Having lost this battle and having failed to elect 
many delegates to the new assembly, the radicals 
nevertheless proposed in the constitutional conven- 
tion to substitute a system of Soviets or workers 
councils for the parliamentary regime. Still the 
conservative Social Democrats utterly rejected the 
idea. The Scheidemann cabinet in January, 19 19 
officially declared against the council system, and 
announced that it would not permit the introduction 
of the scheme into the constitution. A few weeks 
later, however, there came a wide-spread strike and 
a committee of the strikers delivered an ultimatum 
to Scheidemann calling for "the anchorage of the 
councils in the constitution." The cabinet yielded 
and a compromise provision was inserted in the 
fundamental law of Germany. 

The system instituted by this compromise is far 
different from the Russian model or the scheme pro- 
posed by the Independent Socialists. The political 
and representative parliament is retained and en- 
dowed with complete sovereignty. There is insti- 
tuted however, along with it, a double set of eco- 
nomic councils. The constitution declares that 
"wage earners and salaried employees are quali- 



NEW CONSTITUTIONS OF EUROPE 159 

fied to co-operate on equal terms with employers in 
the regulation of wages and working conditions, as 
well as in the entire economic development of pro- 
ductive forces. The organization on both sides and 
the agreements between them will be recognized." 

In accordance with constitutional provisions and 
statutory enactment, an elaborate set of economic 
councils was instituted in Germany. The employees 
of all factories of any size are organized, beginning 
at the bottom with the factory councils and rising 
to a grand organization known as the national 
workers council. Parallel to this organization of 
employees is a system of economic councils, composed 
of representatives of employers, employees, and 
other interested classes of the population. These 
economic councils are formed on a district basis and 
are crowned by a national economic council. When 
the first session of this national economic council 
was held, on June 30, 1920, enthusiasts declared 
that the council included in its membership the ablest 
business men and labor leaders in the country and 
would inevitably become in the course of time a 
genuine economic parliament absorbing the sover- 
eignty of the two political assemblies, the Reichstag 
and the Reichsrat. This prediction has not been 
fulfilled and indeed the signs are now all to the con- 
trary. Most of the active workers prefer their 
regular trade unions to official factory councils and 
most employers prefer operating as a class rather 
than as members of a grand economic parliament. 

This does not mean, 'however, that economic in- 
fluences have been withdrawn and that the political 



l6o CROSS CURRENTS IN EUROPE TO-DAY 

government is supreme. The employers of Ger- 
many are independently organized in a Federation 
of German Industries and the employees are 
equally well organized in their Federation of Trade 
Unions. When in March, 1920, the old military 
party attempted its coup d' etat, the political govern- 
ment, frightened and powerless, fled from Berlin 
under the cover of darkness. Nothing but a swift 
and deadly general strike of the workers paralyzed 
the counter-revolutionary action of Kapp and Liitt- 
witz. On this occasion the political government 
owed its very existence to an economic organiza- 
tion. 

Later in 192 1 when the political government was 
wrestling with the thorny problem of money for in- 
demnities, the capitalists, speaking through their 
Federation, laid down the terms and conditions on 
which they would grant their economic support. 
This amounted in effect to a capitalist dictatorship 
for the moment. The ire of the working classes 
was now aroused. Speaking through their Federa- 
tion of Trade Unions they called upon the political 
government to "reject unconditionally the demands 
made by the industrialists." Threatened by eco- 
nomic paralysis from the side of the capitalists and 
financiers and a general strike from the side of the 
working classes, the political government of Ger- 
many was in doubt as to which way to turn. For 
the moment, it seems that the promise of reconcilia- 
tion and gradual evolution into a new industrial 
democracy offered by the system of councils has 
vanished and warfare along the old lines is restored. 



NEW CONSTITUTIONS OF EUROPE l6l 

Between the two opposing forces and confronted by 
the demand for reparations, the government of Ger- 
many is probably the weakest in the world. 

In the midst of the changing" currents of European 
politics it is difficult to discover tendencies that give 
promise of permanence, but it seems established be- 
yond a doubt that the enthusiasm for economic 
councils is on the wane. It was found by experience 
that economic as well as political assemblies were 
given to rhetoric and did not produce wheat or 
shoes. Broadly speaking, therefore, we may say 
that outside of Russia the general drift of things is 
toward parliamentary government modelled on 
British lines. Economic councils still exist and may 
yet play an important role, but it does not appear 
that they give promise of superseding political coun- 
cils. 

There is, however, this important development to 
note. The principle of proportional representation 
has received a remarkable extension during the past 
five years. The German constitution provides that 
representatives in the national parliament shall be 
elected "in accordance with the principles of pro- 
portional representation." A subsequent law elab- 
orates the details. France, Belgium, Norway, Fin- 
land, Latvia, Esthonia, and Czechoslovakia have 
adopted the device in one form or another and Jugo- 
slavia assures representation to minorities. This 
system, as pointed out above, makes possible group- 
ings of voters along economic lines, and in its pure 
form assures to each group a number of representa- 
tives proportioned to its strength at the polls. In 



162 CROSS CURRENTS IN EUROPE TO-DAY 

practice the election results under proportional rep- 
resentation are in rough accord with the principle 
of group representation, but while economic groups 
as such are thus drawn into the political parliament, 
economic conflicts are by no means eliminated. In 
Germany, with proportional representation strictly 
applied and with economic councils elaborately or- 
ganized, the old antagonism between organized capi- 
tal and organized labor is by no means abated. In- 
deed it appears to grow in intensity. So it seems 
that men may rouse from their slumbers and shake 
their chains to earth like dew only to find in the 
rights of self-government problems more baffling 
than those of old faced by kings, lords, and priests. 



VI 

THE RUSSIAN REVOLUTION 

IT is hazardous to weigh current events in the 
scales of the future but there is good reason for 
thinking that the historian of the next century will 
count the Russian revolution among the most signif- 
icant acts in the great drama of the present age. 
There has been no social convulsion like it since 
ancient times when victors utterly destroyed the 
vanquished as Rome ravaged Carthage. The proc- 
ess was so terrible and so deep-penetrating that no 
imaginable restoration could wipe out the ruin 
wrought in the old order of things. The economic 
system which it challenged may be in a great measure 
reestablished; indeed this seems to be coming 
about, but the open renunciation of imperialism and 
the revelations of the old diplomatic methods will 
stand among the historic events of our epoch. The 
English revolution of the seventeenth century, as 
Macaulay has pointed out in one of his best pas- 
sages, was a superficial affair compared with the 
wide-sweeping and devastating holocaust known as 
the French revolution. If one had the gifts of Ma- 
caulay, one could draw comparison equally striking 
between the French upheaval with its Dantons and 
Robespierres and the Russian holocaust with its 
Lenins and Trotzkys. 

163 



164 CROSS CURRENTS IN EUROPE TO-DAY 

In both of these revolutions, an old and powerful 
monarchy was extirpated, a church disestablished, 
a clergy overthrown, a nobility subverted, an im- 
mense amount of property confiscated, a flood of 
paper money turned loose only to be repudiated, and 
an ancient order of thought and economy challenged 
and defied. But the French revolution wrought no 
such havoc in the ranks of the clergy and nobility as 
the Russian revolution has brought to pass. The 
French radicals left the clergy with large revenues 
from the state and they firmly fixed the rights of 
private property in land at the very moment when 
they overthrew the church and dissolved feudal ob- 
ligations. Though in the days of the Terror, the 
Paris proletariat made itself felt in the councils of 
state, the final outcome was a triumph for the bour- 
geoisie, a class with experience in the management of 
property and the direction of affairs, if not skilled 
in the arts of government. In Russia on the other 
hand, the power of the state passed into the control 
of a laboring class that had not the slightest famil- 
iarity, through practice, with the exigencies of gov- 
ernment. Moreover that class not merely seized 
the trappings of the state; it assumed responsibility 
for the administration of the complicated organism 
of industry, transportation, and agriculture. It pro- 
fessed a desire and attempted in fact to destroy the 
upper classes root and branch. 

As Macaulay wrote of the returning French prin- 
ces in 18 15, so one might write of the emigrants 
after a possible restoration in Russia : "They came 
back to a land in which they could recognize nothing. 



THE RUS9IAN REVOLUTION 165 

The seven sleepers of the legend who closed their 
eyes when the Pagans were persecuting Christians 
and woke when the Christians were persecuting each 
other, did not find themselves in a world so com- 
pletely new to them. Events had come thick and 
fast. Twenty years had done the work of twenty 
generations. The old institutions and the old feel- 
ings had been torn up by the roots. . . . The revo- 
lution in the laws and in the form of government 
was but an outward sign of that mightier revolution 
which had taken place in the heart and brain of the 
people." Communism is an admitted failure in 
agriculture. A form of state capitalism is in proc- 
ess of establishment. But the days of the Ro- 
manovs and Stolypins are no more likely to return 
than the days of the Bourbons and Richelieus. 

It is not merely as one of the great cataclysms of 
history that the Russian revolution arrests our at- 
tention. There are lessons in it, no doubt, for all 
those who have occasion to deal with human nature 
in politics, but there are more practical reasons for 
seeking to discover its underlying forces. The re- 
lations of the United States to the Russian govern- 
ment are as yet undetermined; they are in a state of 
flux. We have moved from armed intervention to 
homiletic reviews and are still in motion. If the 
Russian revolution was brought about by a hand- 
ful of agitators bought by German gold, then one 
policy seems appropriate. If it was effected by a 
few designing men who imposed their will upon 
more than a hundred million Russians against all 
popular interests and feelings, then another policy 



l66 CROSS CURRENTS IN EUROPE TO-DAY 

seems appropriate. If there is a class in Russia, now 
oppressed, that is strong enough and intelligent 
enough to supersede the existing government, then 
still a third policy might be adopted. Conceivably 
the policy of non-intervention might be followed but 
that does not seem to fit in with the temper and 
methods of the new epoch in our history. 

At all events those citizens who want to see things 
as they really are will try to penetrate the mists that 
surround the Russian situation and find out why the 
present group of men came to power and how they 
have managed to hold it. The following pages are 
built, not upon the frothy essays of frenzied propa- 
gandists, but upon the soberest accounts given by 
Bolshevik and anti-Bolshevik writers. In them an 
attempt is made to discover the nature of the forces 
which precipitated the Bolshevik revolution and 
have kept its authors so long in authority. 

Until they were actually charged with the respon- 
sibilities of administration, the Bolsheviki had given 
little or no attention to the actualities of their com- 
munist designs; that is, to the technical questions of 
production and distribution. Their leaders had 
written scores of books and pamphlets on the evolu- 
tion of capitalism, on the state, on agriculture, and 
on economics, Marxian and orthodox; but they con- 
sidered it academic for a small and obscure minor- 
ity of revolutionaries to consider in detail what they 
would actually do when they grasped the reins of 
authority. Their one and fundamental aim was the 
conquest of power — the possession of the agencies 
of the state; namely, the army, the police, the public 



THE RUSSIAN REVOLUTION 167 

buildings, the railways, and other outward signs of 
government. 

This is evident from the writings of the leaders 
themselves. A glimpse into the psychology of revo- 
lution is given us by Zinoviev in his little booklet on 
the life and work of Lenin. He tells us that it 
was customary for simple-minded labor members of 
the Duma to go to Lenin for advice and counsel dur- 
ing the winter of 1911-12. One of them on a cer- 
tain occasion said to Lenin: "We want to engage 
in serious legislative work; we want to consult you 
about the budget, about such and such a bill, about 
certain amendments to certain bills, introduced by 
the Cadets, etc." To this question Lenin replied, 
in a burst of laughter: "My dear man, what do 
you want a budget, an amendment, a bill for? You 
are workmen and the Duma exists for the ruling 
classes. You simply step forward and tell all 
Russia in simple language about the life and toil of 
the working class. Describe the horrors of capi- 
talist rule, summon the workers to make a revolu- 
tion, and fling into the face of this reactionary Duma 
that its members are scoundrels and exploiters. 
You had better introduce a 'bill' stating that in 
three years' time we shall take you all, landlords and 
capitalists, and hang you on the lamp-posts. That 
would be a real bill!" 

The conquest of power, not the execution of 
a carefully detailed program of communism, 
that was the first and essential element in the 
theory and practice of the Bolsheviki. Ac- 
cordingly they made use of the concrete historic 



l68 CROSS CURRENTS IN EUROPE TO-DAY 

forces at work in the summer and autumn of 19 17 
for the purpose of raising themselves to power. 
The first of those forces was the wide-spread and 
growing passion for peace among the Russian masses. 
It is not necessary to recapitulate here the sufferings, 
losses, and agonies out of which the bitter cry for 
peace sprang. There was the fact. It appeared 
among the soldiers at the front and the peasants at 
home. And it will be remembered that the army 
was composed mainly of peasants. 

By following the course of events from the over- 
throw of the Tsar's government in March, 1917, to 
the triumph of the Bolsheviki in November, one 
can see how insistent was the popular demand for 
an end to the war. The new Provisional Govern- 
ment had hardly got under way before it was com- 
pelled to bow before the storm. On March 27 the 
Petrograd soviet issued its historic address denounc- 
ing the war as an imperialist enterprise and demand- 
ing an immediate peace on the basis of no annexa- 
tions, no indemnities, and the right of self-deter- 
mination. So great was the popular pressure be- 
hind this manifesto that the Provisional Govern- 
ment was compelled to give heed. It was even 
forced to announce this as the official program of 
Russia and to transmit it to the allies. In carry- 
ing out this promise, however, the Foreign Minister, 
Miliukov, added a communication of his own which 
in effect repudiated the peace program. As Miliu- 
kov conscientiously believed in the annexationist 
policies of the former imperial government, he could 
hardly have done otherwise; but the effect of his 



THE RUSSIAN REVOLUTION 169 

virtual repudiation of the soviet program was an 
uprising in Petrograd which brought about his resig- 
nation from office. 

Still underestimating the revolutionary force of 
the peace party, the Provisional Government, on the 
insistence of the Allies, undertook the fateful of- 
fensive of July 1, which ended in the rout of the 
Russian army. This was followed by another up- 
rising in Petrograd; an uprising under Bolshevik in- 
fluence if not under that leadership. The revolt 
was put down and the Bolshevik chiefs were either 
imprisoned or exiled. Peace agitation continued un- 
abated. The advocates of war thereupon decided 
that the Provisional Government was too weak for 
the occasion. Choosing as their agent, Kornilov, 
the commander-in-chief, they attempted an uprising 
of their own. This stroke which failed utterly, 
owing to the want of popular support, merely 
strengthened the hands of those bent on peace at all 
costs, and naturally their avowed friends, the Bol- 
sheviki. 

The latter made the most of the opportunity. In 
their attempt to conquer power, they summoned to 
their side all those who wished to stop the war at 
once. And the peasants and soldiers answered 
them. After their day of triumph, the Bolsheviki 
adopted, as their first article of faith, peace among 
the warring nations. The Soviet Government issued 
an official invitation to all the belligerents to suspend 
hostilities, conclude an armistice, and make a peace 
on the basis of no annexations and no indemnities. 
Failing to secure a favorable response from the 



170 CROSS CURRENTS IN EUROPE TO-DAY 

Allied governments, the Bolsheviki assumed full re- 
sponsibility for taking Russia out of the war. They 
concluded the treaty of Brest-Litovsk with Germany 
and Austria. Those Russians who wanted peace 
with the Central Powers got it. They had the 
Bolsheviki to thank for it. Thus Lenin and Trot- 
zky made use of one of the great historic forces 
that was sweeping through Russia in the summer 
and autumn of 19 17 — the passion for peace. 

The second great historic force with which those 
who hoped to govern Russia had to reckon was the 
passion of the peasants for the land. We are 
not now concerned with the origin and development 
of that movement. The Russian peasants had been 
emancipated in 1861, but the terms of emanicpation 
imposed heavy burdens upon them. Russia in 1917 
was still a country of great estates. The peasants 
struggled under a load of rents and taxes that had 
grown heavier with the passing years. Many an 
angry uprising had borne witness to the intensity 
of their desperation. In the old regime, the peas- 
ants saw only slavery. There was promise in the 
new Provisional Government, but the spring and 
summer of 19 17 passed without bringing to the 
peasants their coveted land. The Provisional Gov- 
ernment, controlled as it was mainly by bourgeois 
and liberals, had neither the hot desire nor relentless 
will needed for the revolutionary stroke of destroy- 
ing landlordism absolutely and without compensa- 
tion. This required the same kind of reckless and 
indomitable will that had made peace at all costs. 

Nevertheless it was patent to all thoughtful Rus- 



THE RUSSIAN REVOLUTION 171 

sians that some solution of the land question could 
not be avoided without peril to the existing order. 
The Bolshevik! knew well enough that the peasants 
were historically no friends of communism. Yet 
they were bent on the conquest of power and the 
peasant movement was a living, driving force that 
offered to sweep them on to success. For this we 
have the words of Trotzky himself. "The war 
has assigned a decisive role in the events of the 
revolution to the army. The old army meant the 
peasantry. Had the revolution developed more 
normally — that is, under peaceful circumstances as 
it had in 19 12 — the proletariat would always have 
held a dominant position while the peasant masses 
would gradually have been taken in tow by the pro- 
letariat and drawn into the whirlpool of the revolu- 
tion. But the war produced an altogether different 
succession of events. The army welded the peas- 
ants together, not by a political but by a military 
tie." 

Is it not significant that at the very first session 
of the council of the Soviets after the November 
revolution, Lenin introduced and carried two decrees 
— one of them for peace and the second on 
the land question? Number two on the Bol- 
shevik program was the decree nationalizing all 
the land held by the imperial family, the church, and 
the great landlords. The small peasants and the 
Cossacks were exempted from the operation of the 
law. All the land so nationalized was transferred, 
to use the Bolshevist euphemism, "to the peasantry 
at large." 



172 CROSS CURRENTS IN EUROPE TO-DAY 

Thus the second great historic force of which 
the Bolshevists made use was no more inherently 
communistic than the first. On the contrary, it was 
in spirit and form diametrically opposed to all com- 
munistic devices. It was founded on deep-seated 
individualism and it nourished the spirit of egoism. 
No one knew this better than the socialists. A 
thousand pamphlets and treatises attest this fact. 
Surely no Bolshevik leaders were deceived by the 
phrase "transferred to the peasantry at large." If 
any of them was so innocent as to suppose that it 
meant anything more than peasant proprietorship in 
practice, he was certainly undeceived before the lapse 
of many months. 

Third and last upon the immediate program of 
the Bolsheviki was a decree appealing directly to 
labor. It instituted a system of shop control by 
labor committees. According to the Bolshevik 
formula it was intended to establish "a control of 
production by working class committees supervising 
all the industrial establishments of their respective 
localities in conjunction with the local Soviets and 
under the control of the Supreme Economic Coun- 
cil, formed by representatives from various people's 
commissions. This latter was a measure for com- 
batting war-profiteering, speculation, conspiracies of 
manufacturers against the revolution and other capi- 
talist practices as well as a first step towards the tak- 
ing over of all means of production by the people." 
Though avowedly a step in the direction of social- 
ism, it did not, either on its face or in intent, pro- 
pose an immediate communistic solution of the in- 



THE RUSSIAN REVOLUTION 173 

dustrial problem. It did not attempt to destroy 
the general framework of capitalist society. The 
position of the existing owners, the compensation of 
technicians, and the methods of exchange were still 
unsolved problems. Banks, securities, foreign 
loans, and the general scheme of capitalist finance 
still stood. The system was in mortal peril, no 
doubt. The revolutionary government had an- 
nounced its ultimate doom, but in November, 19 17, 
many roads to doom were theoretically open. It 
was not until three months later, namely, February 
10, 19 1 8, that the foreign and domestic debt was 
repudiated, and even then with conditions. It was 
not until April 23, 19 18, that shipping, private 
banks, and foreign trade were completely national- 
ized. By May 15, 19 18, only about two hundred 
and thirty industrial enterprises had been national- 
ized — "half of them for resistance and sabotage." 
How the communists would have dealt with the 
capitalistic structure and processes of the old 
society if they had enjoyed an opportunity to work 
out their fate in peace is a matter of pure con- 
jecture. Having ridden into power on a storm of 
passion and distress, they found themselves, after 
the morning of victory, still tossed about on a sea 
of uncertainty. They had yet to reckon with his- 
toric forces not of their own choosing. The man- 
agers of factories, technicians, telephone operators, 
government clerks, bank officers, and the rest of the 
bourgeoisie "sabotaged" the Bolsheviki; gave them 
an abundance of their own medicine. Kerensky at- 
tempted a counter revolution. Kolchak, Denikin, 



174 CROSS CURRENTS IN EUROPE TO-DAY 

Yudenitch, and Wrangel raised civil wars against 
them. British, Japanese, and American forces 
penetrated Siberia while British and American forces 
landed at Archangel. The governments of France, 
England, and the United States in effect, whatever 
the theory, waged war on Russia. They blockaded 
Russia. They gave aid and comfort to the enemies 
of the Bolshevik government. Thus the leaders 
who had been carried into power by historic forces, 
not by the appeal of a carefully laid program, found 
themselves compelled to take up arms against a host 
of enemies, domestic and foreign. War was the 
outstanding fact that confronted them on the day 
after their nominal triumph. Now war is a fact, 
not a theory. It calls for men, supplies, and move- 
ment. Prolonged, sustained, high-tension action 
springs from deep, unshakable passion. In a 
period when action is the dominant note, the most 
passionate, the most radical come to the front. 
That is what happened in Russia. 

It was in the midst of such circumstances that the 
extreme communist decrees, one after the other, 
were issued by the Soviet Government. The facts 
of chronology are not to be disputed. That the 
Bolsheviki had preached class hatred and extreme 
measures in and out of season for years is not to be 
questioned. That fact stands. That they had ad- 
vocated social or common ownership of the means 
of production is likewise a fact. But it was not their 
program that carried them into power. It was 
their unrelenting will to make peace and give land to 
the peasants that drew to them a force sufficient for 



THE RUSSIAN REVOLUTION 175 

the conquest of the state. Had they been per- 
mitted to work out their program without interrup- 
tion by foreign and domestic wars it is impossible to 
say just what processes they would have followed. 
Anyway that is a matter of idle speculation. The 
truth is that they had to move forward day by day 
in the midst of powerful and well-nigh baffling 
forces. Their conduct during the revolution and 
immediately afterward shows them to be oppor- 
tunists in matters of politics and economics. They 
did not attempt to apply at one blow the entire com- 
munist program. They delayed and temporized 
within the limits of the maintenance of their do- 
minion. Their extreme measures, as chronology 
shows, were born in the midst of extreme dangers 
and difficulties. That these measures would have 
come anyway may be argued by all and sundry, but 
the discussion of such a theorem is a sheer waste of 
time. 

Long afterward, when the many failures of their 
communist policy were only too evident, the Bol- 
shevik leaders declared that they had been forced 
into their Utopian devices by events beyond their 
own control. In a speech delivered in October, 192 1, 
Lenin took this position. "If one recalls our pre- 
vious economic literature and what our communists 
were writing before our assumption of power 
. . . ," he said, "one will see that in this period, 
when we had not finished the first task of building 
up the soviet power and had only just emerged from 
the imperialist war, we talked of our tasks of eco- 
nomic reconstruction much more guardedly and cir- 



176 CROSS CURRENTS IN EUROPE TO-DAY 

cumspectly than during the second half of 19 18 and 
during the whole of 19 19 and 1920. One may 
refer, for instance, to such decisions as the decree of 
the All-Russian Central Executive Committee of 
April 29, 19 18 which pointed out the necessity of 
reckoning with village economy, dealt with the role 
of state capitalism in the construction of socialism, 
and laid stress upon the significance of one-man re- 
sponsibility in civil administration as distinct from 
the tasks connected with political and military 
power. . . . Partly under the influence of the mili- 
tary tasks with which we were suddenly over- 
whelmed and partly owing to the desperate position, 
as it seemed, of the Republic, we made the mistake 
of trying to bring about an immediate transition to 
communist production and distribution. ... A brief 
experience served to convince us that this was a mis- 
take and contrary to what we had formerly written 
on the transition from capitalism to socialism, and 
that if we did not pass through the period of 
socialist accounting and control it would be impos- 
sible to pass even to the lowest stages of commun- 
ism." 

If it be said that Lenin is here indulging himself 
in a happy after-thought in defence of his reversion 
to a semi-capitalist system, still it must be conceded 
on his behalf that he never was deceived by the child- 
ish phantasy that paper decrees would establish the 
new heaven and the new earth. In his famous speech 
on "The Soviets at Work," delivered in the spring 
of 19 1 8, he had warned his fellow-communists that 
they then confronted the real problem of the revolu- 



THE RUSSIAN REVOLUTION 177 

tion, namely, that of management, administration, 
production. "This," he said, "is the most difficult 
problem. It means the organization of the eco- 
nomic foundations of life for millions of people on 
a new basis. And it is the most promising problem, 
for only after its solution shall we be able to say that 
Russia has become not only a soviet, but a socialist 
republic." 

Again in the course of the same address, he ex- 
pressed his firm conviction that "the possibility of 
socialism will be determined by our success in com- 
bining soviet rule and the soviet organization of 
management with the latest progressive measures of 
capitalism." This is not the doctrine of the fanatic 
who believes that his system can be applied and will 
be maintained though the heavens fall. It is the 
doctrine of the pragmatist who asks of a system: 
"Will it work?" It shows that even the communist 
may learn by experience. 

Again recognizing the difficulties of prophecy in 
this rapidly changing world, it appears fairly safe 
to guess that, in the absence of another violent over- 
turn in Russia, two great economic results will flow 
from the revolution. Russia will become a huge 
peasant democracy assimilated in type to the democ- 
racies of Rumania, Bulgaria, and Jugoslavia. That 
much appears certain. A restoration of semi-feudal 
tenures seems out of the question. If the Bolshe- 
viki continue to hold the reins of power, namely the 
government and the army, with the support of the 
peasantry, a form of state capitalism will take the 
place of communism. Petty industries will flourish 



178 CROSS CURRENTS IN EUROPE TO-DAY 

under private initiative and the large industries, 
railways, and natural resources will be exploited by 
concessionnaires under state supervision. A new 
middle class may thus be created to dispute the sov- 
ereignty of the Bolsheviki. Such a turn in events 
would of course admit of renewed economic inter- 
course with the capitalistic nations of the world. 
But all this may prove to be mere speculation. 

Whatever course the domestic economy of Rus- 
sia may take in the future, however deep may be the 
influence of the Bolshevik revolution on the internal 
affairs of Russia, one of the most striking things 
about it all, at least so far as the United States is 
concerned, is the new direction given by the Russian 
cataclysm to the diplomacy and international policies 
of Europe. It is now conceded that the old Imperial- 
ist Russia was one of the most disturbing forces of 
the modern age. We know from the secret docu- 
ments recently made public that Russia was a rest- 
less, aggressive agent in the organization of forces 
in the Balkans which precipitated the Great War. 
Russia was active in stirring France and England to 
take sides in her behalf. Hating democracy and 
finding both glory and profit in imperial and mil- 
itary adventures, the Russian oligarchy was one of 
the most dangerous elements in the world. Its 
return to power would be a disaster so great that 
the mind of man could hardly encompass it. The 
profits that American business men might make 
from trade with such a system of "law and order" 
would be a mere bagatelle as compared with the 



THE RUSSIAN REVOLUTION 179 

costs of future wars likely to be let loose by Russian 
imperial policies of the old type. 

Even more important than the European com- 
plications created by a revival of the old order in 
Russia would be the disturbance reintroduced into 
the affairs of the Far East by an imperialist restora- 
tion. We now know from the secret papers and 
treaties taken from Russian archives that the 
Tsar's government was a relentless foe of the Ameri- 
can policy of "the open door." When the revolu- 
tion broke in Petrograd, the imperialist party was 
actually arranging to settle scores with the United 
States in the matter of China. Had the Russian 
government emerged from the world war intact and 
with enhanced prestige, no one can doubt, after 
reading the secret archives now available, that Rus- 
sia would have taken the lead in the formation of a 
combination to oust the United States from the Far 
East. It seems hardly necessary to point out the 
import of a conjuncture so fraught with danger for 
this nation. 

A less ponderable result of the Russian revolution 
in the sphere of international relations has been the 
merciless exposure of the methods, tactics, and de- 
signs of secret diplomacy as pursued by all the 
great powers of Europe without a single exception. 
By tearing open the archives of Petrograd and pub- 
lishing the Secret Treaties and the secret corres- 
pondence relating to the events that led up to the 
Great War, the Bolsheviki gave a shock to the solid 
structure of diplomatic intrigue and chicanery from 



l8o CROSS CURRENTS IN EUROPE TO-DAY 

which it will hardly recover. The full effect of this 
exposure has not yet been felt. In the course of the 
next ten or twenty years it will have reached the 
mind of the vast masses of mankind. It is doubtful 
whether any government will then be able to pursue 
the discredited methods with the same reckless 
disregard for consequences. The old diplomacy 
will by no means disappear, but the sword of 
Damocles will hang over the head of the govern- 
ment which practices methods that have wrought 
such wreckage in Europe. Another concussion such 
as that which shook the world from 19 14 to 19 18, 
arising from the same imperialist intrigues and 
deceptions, would doubtless produce new revolutions 
that would stagger the imagination. By the expo- 
sure of secret diplomacy, the Bolsheviki contributed 
immeasurably to enlightening mankind on the 
methods and devices so perilous to peace and human 
welfare. Whatever their motives, the result has 
been tremendous. When the slow moving but ter- 
rific forces of public opinion set in train by this ac- 
tion come to bear with full force on the governments 
of the world a peaceful revolution will be wrought 
in international relations. This may be the most 
momentous outcome of the Russian cataclysm. The 
diplomat of our time may well learn from Butler's 
lines on Shaftesbury: 

Our state-artificer foresaw 
Which way the world began to draw. 
For as old sinners have all the points 
O, th' compass in their bones and joints, 



THE RUSSIAN REVOLUTION 181 

Can by their pains and aches find 
All turns and changes of the wind, 
And better than by Napier's bones 
Feel in their own the age of moons : 
So guilty sinners in a state 
Can by their crimes prognosticate 
And in their consciences feel pain 
Some days before a shower of rain. 



VII 

THE RISE OF NEW PEASANT 
DEMOCRACIES 

THOUGH bread remains as of old the very- 
staff of life and must come as of old from the 
open fields, the thought of the modern world is 
mainly urban. The cities are the centres of modern 
discussion. There are to be found the writers, the 
makers of books and newspapers, the politicians and 
the statesmen, the clergy, the various organs of 
opinion and propaganda, the libraries, the parlia- 
ments, the cabinets, and the forums for debate and 
discussion. Since most of the thinkers whose ideas 
find expression in print are urban, naturally the 
city is the object of their interest and their specu- 
lation. The problems of finance, business, com- 
merce, industry, and labor thus inevitably occupy 
the foreground of modern thought. For every 
editorial that touches the widestretching fields of 
the countryside there are a hundred bearing upon 
the conflicts of capital and labor, the methods of 
municipal government and politics, and the foun- 
dations of stocks and bonds. For every book on 
agrarian economy, there are a score on industrial 
economy, finance, and socialism. The news that 

crowds the pages of our daily journals, save in a 

182 



RISE OF NEW PEASANT DEMOCRACIES 183 

time of populistic disturbances, is the news of the 
city and its industries. Even the plots of the mov- 
ing pictures, excepting the Wild West shows, are 
mostly laid in cities and depict urban rather than 
country life. When the farmer and his wife ride 
to town in a Ford to see the fleeting film, they do 
not look upon Cincinnatus at the plow, but Douglas 
Fairbanks climbing a twenty-story office building. 
So the mind of the farmer and peasant becomes 
submerged in and subdued by the urban mind. To 
the natural economic forces driving the rural popu- 
lation into the cities is added the powerful drawing 
force of urban thought which, superficially at least, 
colors all news, all art, all economic discussion, all 
literature, all politics. 

And yet though this is true, the country remains 
as in the days of Solon and the days of the Gracchi 
the basis of all life. Many a melancholy spectacle 
demonstrates this axiomatic truth with terrible em- 
phasis. If you will read carefully Fowler's inter- 
esting book on Roman Society or Davis' equally 
fascinating work on Wealth in Ancient Rome you 
will find a marvellous picture of daily life in the 
homes, banking houses, and streets of the immortal 
city on the banks of the Tiber. In these books you 
can learn how a vast urban population was brought 
together and sustained, only to be dispersed. You 
can see with your mind's eye the great banking 
houses along the Appian Way from which bills, 
drafts, and orders went out to the ends of the known 
world. You can see the markets thronged by the 
merchants of every clime dealing in tin and lead from 



184 CROSS CURRENTS IN EUROPE TO-DAY 

Britain and silk and spices from the Far East. The 
vast structures of business, finance, commerce, in- 
dustry, like the huge deep-founded arches of the 
Augustan palace, seemed eternal. And yet how 
ephemeral it was after all! An invading army in 
a few hours could sack and burn the city, kill or 
scatter its population, and paralyse its business oper- 
ations. Violence and decay restored to the open 
country — to the fields of Italy — the sceptre that 
had been wrested from it. The cities of the ancient 
world fell into decay, Augustan palaces grovelled in 
the dust, grass grew in the streets; but life in the 
open country remained. There were disturbances, 
forays, and disorders, of course, after the rule of the 
Eternal City was broken but even invading barbar- 
ians knew that bread was the staff of life. So it 
happened that the people of Italy today — those that 
pursue their callings now on the banks of the Tiber 
or labor with the vine and olive under the endless 
cloud that steams from Vesuvius — are descendants, 
not of the orators and merchants of Cicero's day, 
but of the men and women who tilled the soil of Italy 
while politicians tickled the multitude and the mer- 
chants chaffered in their counting houses. Again, in 
our own time, we see the great city of Petrograd 
sink down in desolation and people fleeing from it 
into the country as from a plague, because it offers 
only misery and starvation. With the causes we 
are not now concerned, but with the fact — the funda- 
mental fact that every city in the world might be 
levelled to the dust and countless millions could 
still live on the earth in a fair degree of comfort and 



RISE OF NEW PEASANT DEMOCRACIES 185 

with a good deal more security than the masses of our 
cities today. On the other hand, let destruction 
spread over the countryside and every city would 
sink down in hopeless decay. Its buildings and its 
counting houses, its tenements and its factories would 
be the tombs of its inhabitants. This is a common- 
place too often forgotten by those who have occa- 
sion to write and speak in these days. 

If mankind is to endure, the country must endure 
and while it endures it will exert a deep influence on 
the economy and policies of nations in the long run 
in spite of our superficially urban thought. When 
once the city state was ruled by the crowds that 
gathered in the open forum, the opinion of the 
countryside perhaps did not matter so much. Aris- 
totle thought that an agrarian democracy was after 
all far better and safer than an urban democracy. 
It was not subject to the influences of crowd psy- 
chology, nor was it the source of so many turbulent 
disputes and conflicts. The Greek philosopher, 
therefore, flatly declared that " the best material for 
a democracy is an agricultural population. . . . 
Being poor, they have no leisure and therefore do 
not often attend the assembly and not having the 
necessaries of life they are always at work and do 
not covet the property of others." 

From Aristotle's day to our own, the agricultural 
population has figured in the thought and policy of 
the most far-sighted statesmen. It is sometimes 
assumed that Aristotle's dictum about the soil-tilling 
people is of general application in all times and all 
places. Again and again in political literature there 



l86 CROSS CURRENTS IN EUROPE TO-DAY 

appears the notion that an agricultural population is 
essentially conservative — a secure and stable foun- 
dation for a state. Such was the view of Thomas 
Jefferson. Even Daniel Webster, far more urban 
in his thinking, looked upon landed property widely 
distributed as the best guarantee for republican in- 
stitutions. 

"Widely distributed." There is the rub. A con- 
tented peasantry, not too heavily burdened with 
taxation, allowed to pursue its course in peace is 
usually a stable and orderly population. But all 
peasants in all times have not been contented. His- 
tory affords numerous examples of terrible uprisings 
led by tillers of the soil. The Peasants' Revolt in 
England in the year 1383 was a historic outbreak 
from the countryside. Again in Martin Luther's 
day the peasants in many parts of Germany rose 
against their lords and wrought havoc far and wide, 
calling down upon their heads the stern wrath of 
the Wartburg reformer. Long afterward the peas- 
ants of France laid their urgent grievances before 
the king and ruling classes, and in the stirring days 
of the great resolution made known their passion 
for the soil by raiding and burning the chateaux of 
their lords and masters. As a result of their up- 
risings, about one half of the land of France passed 
into peasant proprietorship. The direct exploita- 
tion of the tillers of the soil on a large scale disap- 
peared over half the superficial area of land. Then 
an era of contentment set in. The peasants, once 
the source and support of revolutionary fervor, be- 
came the stabilizers of society — the one element that 



RISE OF NEW PEASANT DEMOCRACIES 187 

could be counted upon to rally to the support of 
government in any contest with the proletariat. 
Having got their portion of the earth's goods by 
revolution, they were for propriety and property and 
public order. 

In central and eastern Europe, however, the ideas 
of the French agrarian revolution were slow in 
coming into force. It is true that in western 
and southern Germany serfdom was on the wane in 
1789 and a free tenantry was taking the place of 
bondmen. It is true also that the famous agrarian 
reforms of Stein and Hardenberg begun in 1807 
transformed the feudal regime of old Prussia. 
Long afterward by many decrees and laws the peas- 
ants of eastern Europe were freed from the more 
irksome and degrading badges of servitude. This 
for example is what happened in 1861 when the 
Tsar of Russia by a sweeping imperial edict declared 
the old bondage at an end. When the Great War 
broke upon the world in 19 14, the servile incidents 
of feudalism as a legal system had disappeared in 
even the most remote parts of eastern Europe. 

But we should not mistake the sign for the sub- 
stance. In point of fact, while the peasants of Rus- 
sia were nominally free after 1861, they were bur- 
dened by heavy economic obligations. They had to 
pay dearly for their supposed freedom. The Rus- 
sian government undertook to compensate the land- 
lords for their lost rights and in turn the govern- 
ment set about the odious task of collecting from the 
peasants. It so happened therefore that the state 
was a more terrible master than the old landlord. 



188 CROSS CURRENTS IN EUROPE TO-DAY 

Often the latter was tender-hearted and in times of 
distress could be moved by pleas of poverty, but 
the officers of the state were inexorable. So the 
peasant of Russia found his cup of freedom filled 
with bitter dregs. Moreover vast estates owned by 
landlords and by the imperial family were not dis- 
solved by the act of emancipation. The peasant 
proprietors were loaded with taxes and idemnities 
and wide reaches of arable land were tilled by ten- 
ants and laborers. Here were the seeds of that 
revolutionary zeal that flamed up again and again 
in the Tsar's realm with such ghastly effects — revo- 
lutions and reprisals which for sheer horror deserve 
comparison with the servile revolts and crucifixions 
of ancient times. 

In East Prussia, Hungary, and Rumania, as 
in Russia, the system of great estates remained un- 
disturbed by the emancipation of the serfs. East 
[Prussia was the home of the Prussian Junker, the 
bulwark of the Hohenzollern family, professional 
militarism, and autocratic pretensions. In Hungary 
and Rumania the position of the peasantry was even 
worse than in Prussia where at least some efforts 
were made to lift the tiller of the soil by education. 
An enlightened English traveller says of Hungary 
in 19 14: "Hungary was a mediaeval state var- 
nished over with an appearance of modernity. Real 
power was in the hands of the great nobles and 
the smaller landowners, and the great landlord 
ruled on his estate with almost unfettered authority, 
having his own court of justice where his own peas- 
ants would be tried and condemned for acts often- 



RISE OF NEW PEASANT DEMOCRACIES 189 

sive to his rule. It was customary to consider and 
treat the peasant as an inferior species of creature 
with whom the only arguments which would avail 
were blows. . . . The privileged classes had all 
the dress, manners, and appearance of civilized 
Western Europeans, but on their estates feudal 
homage was paid to them, their peasants were kicked 
and flogged like — peasants." In Rumania, still fur- 
ther east, the state of the peasant was perhaps 
worse, if anything, than in Hungary. A terrible 
revolt in 1907 bore witness to the fierce discontent 
of the laborers on the land. The single, eloquent 
fact that eleven thousand of them were killed before 
"order could be restored" revealed both the des- 
peration of the peasant and the tenacity of land- 
lordism. 

Without taking time to go into greater details 
as to the surviving areas of servitude, we may 
conclude with the general statement that in 19 14 
millions of Russians, Poles, Prussians, Hungarians, 
and Rumanians lived on the land in a state of econo- 
mic bondage — far removed from that of the free 
peasant proprietor of France or the Rhine country. 
Whoever, in his urban-mindedness overlooks that 
vital, basic fact, overlooks a matter of transcen- 
dent importance in the economic and political life 
of the modern world. 

Of all the revolutions wrought by the cataclysm 
of the Great War none was more fraught with 
significance for the multitude than the agrarian 
revolution in Russia which was the forerunner of 
other revolutions, less drastic but leading finally to 



190 CROSS CURRENTS IN EUROPE TO-DAY 

similar results in wide sections of eastern Europe. 
All accounts of the Russian revolution of November, 
19 17, those that condemn as well as those that 
praise, show the revolutionary zeal of the peasant 
soldiers fused with that of the workingmen of the 
cities. Had the provisional government set up under 
Kerensky dared to take the harsh and revolutionary 
step of destroying landlordism without compensation 
at one blow, it seems that the later Bolshevist up- 
rising would have been without the support neces- 
sary to success. Be that as it may, all agree that the 
peasants furnished a strong support for the Novem- 
ber or Bolshevik revolution of 19 17. According 
to Trotzky, the avowed champion of the proletariat, 
"the war assigned a decisive role in the events of 
the revolution to the army. The army meant the 
peasants." 

Why did the Russian peasant differ from the 
French peasant in 19 17 and furnish the materials 
for a radical social revolution? Was it because he 
understood the abstruse theories of Karl Marx bet- 
ter than did Jacques Bonhomme? Was it because 
the eloquence of Trotzky excelled the eloquence of 
Marcel Cachin? Not at all. The Russian peasant, 
like the French peasant of August 4, 1789, wanted 
the land to till and was ready to resort to violence 
to get it. By 19.17 however the working classes of 
the Russian cities had grown in numbers, in organi- 
zation, in power, and in solidarity so that it was with 
the proletariat rather than the bourgeois that the 
Russian peasant united in attaining his ends. The 
driving force of the land-lust is shown, as we have 



RISE OF NEW PEASANT DEMOCRACIES 19I 

seen above, in the early decrees of the Bolshevik 
government. First was peace. The second was 
land for the peasants. The third was workers' con- 
trol in the factories — not socialism or even com- 
munism as yet. 

After peace, the land. Therein lies the secret of 
the Bolshevik revolution. The Marats and Robes- 
pierres of Petrograd were daring enough to give 
soil to the peasants without indemnities to the ex- 
propriated. After peace, the very first domestic 
measure of the Bolsheviki was the ousting of the 
landlords. To use again the language of a Bolshe- 
vik, Litvinov, this momentous decree "transferred 
to the peasantry at large all lands hitherto in pos- 
session of private landlords, of the imperial family, 
of the church, etc., to be administered and distrib- 
uted for use by peasant committees acting in conjunc- 
tion with the local Soviets, on such a basis that no one 
should receive more land than he and his family 
could cultivate efficiently without hired labor or less 
land than is required for his own and his family's 
needs.'' The fundamental law of socialization 
which went into effect in September, 19 18, did but 
elaborate this general principle. It is true that in 
juridical theory the ownership of the land "passes 
over to the use of the entire laboring population with- 
out any compensation, open or secret, to the former 
owners," but in practice the peasant who tills the 
soil possesses it in spite of parchment, seals, and 
decrees. Thus by one of the ironies of history, a 
vast free peasantry, the bulwark of conservatism, 
will be created by the orders of the world's extreme 



192 CROSS CURRENTS IN EUROPE TO-DAY 

radicals. The irony may pass. The fact remains. 

While the revolutionary crisis was engineered in 
Germany by the spokesmen of the working class as 
in Russia it was not supported to the same extent by 
the peasantry. As we have seen the system of 
great estates did not prevail extensively outside of 
Prussia. The peasants of Saxony and Bavaria, for 
example, were as contented as any agricultural popu- 
lation in the world. A close examination of the 
records shows moreover that the German revolution 
of 19 1 8 was due to a breakdown of the old ruling 
class rather than an impassioned uprising of the 
masses in town and country. Nevertheless, the Ger- 
man revolutionists looked upon the great estates 
of Prussia with feelings akin to those entertained 
by the Bolsheviki. The left wing of the Socialist 
party advocated immediate and unconditional na- 
tionalization of those estates, but its views were 
rejected by the Majority Socialists. The latter, 
afraid to lay hold of the great industries, showed 
even more hesitation when confronted with a prop- 
osition to apply socialization to the land. 

Nevertheless, with the aid of the bourgeois, espe- 
cially of the liberal persuasion, and with the aid of 
the Center or Catholic party which entertained no 
love for the Protestant Junkertum of Prussia, the 
Socialists, under whose auspices the direction of af- 
fairs fell, at least made an attack on the land prob- 
lem. The national convention embodied in the 
new constitution of 19 19 a general clause relative 
to the land. "The distribution and use of the land 
are supervised by the state in such a way as to pre- 



RISE OF NEW PEASANT DEMOCRACIES 193 

vent its misuse and promote the object of ensuring 
to every German a healthful dwelling and to all 
German families, especially those with numerous 
children, homesteads corresponding to their needs. 
War veterans shall receive special consideration in 
the enactment of a homestead law. Landed prop- 
erty the acquisition of which is necessary to satisfy 
the demand for housing, to promote settlement and 
reclamation or to improve agriculture may be ex- 
propriated. Entailments shall be dissolved. The 
cultivation and utilization of the soil is a duty of 
the landowner towards the community. An in- 
crease in the value of land arising without the ap- 
plication of labor or capital to the property shall 
inure to the benefit of the community as a whole. 
All mineral resources and all economically useful 
forces of nature are subject to the control of the 
state." Such are the terms of Article 155 of the 
Weimar Constitution of 19 19. 

The general language of the fundamental law of 
the land was supplemented by decrees and legisla- 
tion. In July of 19 19, even before the national 
assembly had concluded its work, the federal govern- 
ment issued a decree on small gardens and small 
farms providing for the rental or lease of lands not 
used profitably by the present owners. By a federal 
law of the same year an obligation was laid upon 
the German states to undertake land settlements and 
to encourage the creation of small farms. Provision 
was made for transferring state lands to settlement 
associations and for conferring upon them the right 
of preemption in the sale of tracts of land of less 



194 CROSS CURRENTS IN EUROPE TO-DAY 

than twenty-five hectares. The law went further. 
It stipulated that in those districts in which more 
than ten per cent of the arable land is in the hands 
of large holders possessing more than one hundred 
hectares each, associations of landlords for the dis- 
posal of lands must be formed. Such associations 
were required to turn over to settlement associations, 
on the basis of fair compensation, a certain propor- 
tion of their estates. The government of Prussia, 
following the injunction thus issued, served notice on 
the great landlords that compulsory expropriation 
would follow if they did not voluntarily cut up and 
sell their estates. The ultimate effect of these legal 
provisions remains to be seen. The revolution in 
Germany was not so thoroughgoing as in Russia. 

Still it is not to be doubted that the appetite of 
the peasants for the land was whetted. The old 
order with the old spirit will be difficult to restore. 

Between Prussia and Russia lies Poland, long the 
paradise of great landlords. Swept by war and 
wracked by revolution, the agricultural system of 
that unhappy land was shaken to the foundation, 
but the feudal estate survived the storm in many 
sections and the Polish aristocracy received no such 
blow as that dealt to the nobility of Russia. The 
revolutionary feeling in town and country, however, 
made untenable the old position of the landlords. 
Under strong and insistent radical pressure two sig- 
nificant land laws were enacted by the Polish Diet, 
the first in 19 19 and the second during the following 
year. The opening sections of the latter law reveal 
the spirit of the new order: "The agricultural pol- 



RISE OF NEW PEASANT DEMOCRACIES 195 

icy of the Polish republic should be based, above all, 
on good, well-organized peasants' farms of different 
types and acreage, capable of intensive cultivation 
and based on private ownership. . . . The owners 
of the land may only be persons who will work 
themselves, or their heirs, with the exception of that 
land which will be placed at the disposal of the land- 
less proprietor and which is exploited by municipal 
or rural bodies." The technical provisions of the 
legislation carrying these principles into effect need 
not detain us here. We may conclude with the 
observation of a student well-versed in Polish af- 
fairs, Dr. Guest, that "land reform in Poland will 
certainly go on because there is no way of resisting 
it except by sheer reaction and as the peasants have 
the support of the socialist town workers, the two 
wings of democracy are united." Still this is proph- 
ecy. 

To the southwest of Poland the new republic of 
Czechoslovakia was carried into the current of 
land reform by revolutionary fervor. With a so- 
cialistic President and a parliament composed in 
large part of socialist and radical members, it was 
inevitable that the feudal regime should be attacked. 
Within a few weeks after the wreck of Austria in 
November, 19 18, the Czechs had undertaken many 
fundamental changes in the old regime. All titles 
of nobility, orders, and distinctions were swept 
away in one decree. Another, adopted before the 
declaration of independence was two weeks old, pro- 
vided for the division of the great estates. The 
domains held by the former reigning families, by 



I96 CROSS CURRENTS IN EUROPE TO-DAY 

enemies of the state, and by offenders against the 
republic were confiscated without compensation. 
The technical details of land distribution were set 
forth at length in a great land law enacted on Jan- 
uary 30, 1920, based upon the broad principle that 
"the land shall be given in the first place to those 
able to cultivate it." The execution of the law was 
vested in local commissions representing the various 
political groups, with a view to assuring the effec- 
tive enforcement of its terms. While this had an 
unfortunate effect upon scientific administration, it 
seemed to give a guarantee that the redistribution of 
the land would be thoroughgoing. Czechoslovakia 
is destined to have its rich and diversified indus- 
tries complemented by a large landowning peasantry. 
Already it seems to offer more promise of stability 
than any of the new creations of central and eastern 
Europe. 

How different was the fortune of Czechoslovakia's 
former partner in the Hapsburg empire, Hungary. 
One of the most conservative and mediaeval coun- 
tries of Europe in 19 14, it fell for a short time into 
the hands of Bolshevik extremists after the revolu- 
tion of 19 1 8. Though the communist regime was 
soon liquidated and a White Terror inaugurated, the 
great landlords did not quite recover their former 
power or their serene indifference to the peasant 
movement. On the contrary, frightened within an 
inch of their lives by their experience with the dic- 
tatorship of the proletariat and by the course of 
events in Russia, they decided to fight fire with fire. 
By a law enacted in 1920, they provided in rather 



RISE OF NEW PEASANT DEMOCRACIES 197 

generous terms for a division of estates and a peas- 
ant proprietorship. As the law was not self-enforc- 
ing and the government was in the hands of land- 
lords the future of the promised agrarian revolution 
seemed in doubt. However, a trained English ob- 
server who has recently journeyed through Hungary 
says: "Universal suffrage gained by the revolution 
plus a peasant proprietor program, forced by fear of 
Bolshevism, has made the peasants into a very 
strong power and much stronger than the land- 
owners bargained for. Some of the best observers 
in Hungary think that politics for years to come 
will group around the fight between big landowners 
and the peasants over the land. All other politics 
will depend on that. The question of the return of 
the Hapsburgs is only a move in this contest for, 
to the big landlords, the Hapsburg family represents 
the old regime, as it does to the military class who 
support the policy of return, because without it, 
their own orders and distinctions no longer have the 
same value and importance. Anti-Semitism is only 
a move in this contest, easily to be explained when 
one learns that the Church is one of the greatest 
landlords in Hungary and one of the most wordly." 
Like Hungary, the neighboring state of Rumania 
passed through the dissolving and liquidating pro- 
cess of defeat and revolution. It had long been the 
home of an overbearing ruling class and an oppressed 
peasantry, perhaps the most benighted in Europe 
outside of Russia. The fires of the peasant revolt 
that had broken out in 1907 were still smoldering 
when the Rumanian armies were defeated and the 



198 CROSS CURRENTS IN EUROPE TO-DAY 

Germans took possession of the capital. Then the 
old regime became bankrupt and Rumania was sud- 
denly transformed into the semblance of a peasant 
democracy. Sweeping decrees established universal 
manhood suffrage and ordered the redistribution of 
the land, nearly half of which was concentrated in the 
hands of about 4000 landlords. The Bolshevik 
revolution in Bessarabia facilitated the process; 
when that province was later annexed a new revolu- 
tionary virus was added to that already existing in 
Rumania. The ferment grew from day to day. The 
Rumanian parliament, subject to irresistible pres- 
sure, then made the first land law still more radical 
by adopting many of the extreme provisions of the 
Bessarabian settlement. According to the latest re- 
ports, the 4000 landlords were vigorously fighting 
for liberal compensation with small prospect of col- 
lecting it. The landlords were dethroned and the 
process of distribution was taking place in a crude 
fashion under the eyes of the village mayors and 
schoolmasters. Reaction is on the horizon, no 
doubt, but the old order of 19 14 is shaken to its 
foundations. 

Thoroughgoing as was the revolution in Rumania, 
it can hardly be compared with the sweeping char- 
acter of that in Bulgaria. When the Bulgarian gov- 
ernment went into bankruptcy with the exhaustion 
of the Central Powers, the whole governing class 
was shattered. Those who had conspired to bring 
the war about and had profiteered during the strug- 
gle were tried and imprisoned. The vigorous leader 
of the opposition to war, the spokesman of the peas- 



RISE OF NEW PEASANT DEMOCRACIES 199 

ants, Stamboulisky, who had been imprisoned for 
his activities and views, was released and made 
prime minister of his stricken country. Bulgaria 
became a peasant nation. Its government, its cabi- 
net, and its chief minister were peasants. Next in 
number in the parliament were the communists and 
socialists, while the bourgeois could hardly muster 
enough to make any impression on the course of 
politics. 

The leaders of the Bulgarian peasants have 
launched a "Green Communism" and issued a ring- 
ing call to the tillers of the soil everywhere to form 
a "Green International." With swinging periods 
that sound like the Communist Manifesto, the 
Bulgarians call upon the peasants of all lands to 
unite and enter upon their inheritance. "Across 
the- vista of human progress there runs like a white 
thread," opens the Green Manifesto, " the his- 
tory of a class which has everywhere and always 
been compelled to submit to unjust and evil 
treatment." It closes": "The international union 
of the peasant masses of all lands will be founded, 
and the voice of the peasant too long silent will be 
heard. This union is the great event of the new 
era and the importance of an understanding and 
close relation among the peasants will have a vast 
significance in the international affairs of the future. 
We wait for this with joyful heart and cherish the 
hope that the Union will improve the hard lot of 
the peasants of the world." A military dictator- 
ship is the only alternative to peasant government in 
Bulgaria. 



200 CROSS CURRENTS IN EUROPE TO-DAY 

Across the border in Jugoslavia, the ferment is at 
work. Already a land of peasant proprietors, it is 
being stirred by the new currents of thought that 
run fast among the long silent tillers of the soil. 
In the convention which drafted the constitution of 
192 1, the radicals, communists, and agrarians were 
in an overwhelming majority. The fundamental 
law framed by them strikes a blow at landlordism of 
the old type. The feudal relationships existing on 
the estates in the regions wrested from Austria- 
Hungary are dissolved and the vassals on those 
estates are given their lands without compensation 
to the former owners. It is decreed that the ex- 
propriation of the great estates and their division 
into properties for the benefit of tillers of the land 
shall be effected by law. No compensation is to be 
granted to former reigning families and to those 
who received their land from foreign authorities. 
Entails are abolished. The large forests are na- 
tionalized and state aid is to be given to producers 
on the land. The Serbs, Croats, and Slovenes, 
therefore, are moving rapidly toward a democracy of 
the peasant type, thus lending their powerful en- 
couragement to the vast mass of tillers of the soil 
who occupy a broad belt of land stretching from the 
Adriatic to the Baltic. 

Can it be doubted that the events just recited will 
have a far-reaching influence on the course of politics 
in Eastern Europe during the years to come? 
Prophecy is not the business of the historian, but one 
cannot help comparing these events with the mo- 
mentous record of the French revolution. While 



RISE OF NEW PEASANT DEMOCRACIES 201 

the economist may inquire whether the system of 
peasant proprietorship is as productive as enlight- 
ened landlordism, the inquiry seems academic. If a 
contented peasantry can be established, will it not 
work in the long run for stability and peace? In- 
deed, can there be social peace without it? At all 
events here is a power with which statesmen must 
reckon as surely as they must reckon with organized 
labor and* combined capital. 



VIII 

SOCIALISM AND THE LABOR 
MOVEMENT 

THE influence of the war upon socialist thought 
and activity was so deep and so far-reaching 
that no single phrase may be safely employed to de- 
scribe it. Undoubtedly division, dissension, and 
disillusionment were among the outstanding char- 
acteristics. But these do not exhaust the subject. 
During the war all the belligerent governments em- 
ployed the principles of state socialism on a large 
scale to obtain the national cohesion and degree of 
production necessary for carrying on the conflict. 
In laying taxes, parliaments made distinctions among 
the various kinds of incomes, which only served to 
emphasize one of the cardinal points in the socialist 
indictment of the capitalistic order. Organized 
labor secured a weight in the councils of nations and 
in the conduct of affairs so great that even the fate 
of cabinets depended upon its decisions. While 
labor relaxed its rules and restrictions in the man- 
agement of industry it developed ideas and prac- 
tices of factory control that were new in the history 
of economy. Trade unionists of the old type, accus- 
tomed to consider only hours and wages and equally 
accustomed to carrying on war against socialistic 
doctrines, found themselves compelled by the stress 

2Q2 



SOCIALISM AND LABOR MOVEMENT 203 

of circumstances to accept the idea of compulsory 
labor and to cooperate more and more with socialist 
leaders. The German government, long the open 
foe of the Social Democrats, was forced with the 
passing months of war to rely more and more upon 
their support and in the end, it seems, escaped a 
domestic revolution by relinquishing all authority 
into their hands. Since the war, naturally, the tide 
has receded but the old landmarks do not bear just 
the same aspect. 

On the subject of disillusionment, though it is 
subtle in its essence, much can be said. The first 
great dream to be dispelled was the power of the 
socialists to prevent war. The feeble attempt of 
the German and French socialists to come to com- 
mon terms in the fateful August days of 19 14 was 
a complete failure. The French socialists sup- 
ported their government because, they said, the war 
was one of defence against Imperialist Germany 
and their government had kept them informed of 
the course of events. The German Social Demo- 
crats gave a support equally loyal to their govern- 
ment on the ground that the war was one of defence 
against Imperialist Russia, although they could not 
say with truth that they had enjoyed the confidence 
of the Chancellor or his colleagues during the rhe- 
torical flourishes that preceded it. Minorities dis- 
sented and fought to the bitter end, paying the full 
penalty for their temerity, but official socialism 
proved no barrier to the war passions that swept 
Europe into the maelstrom and held it there for 
four long, bitter years. 



204 CROSS CURRENTS IN EUROPE TO-DAY 

It may be urged, of course, that no one familiar 
with the numerical strength of the socialists and with 
their pre-war policies expected them to muster the 
power necessary to stop war. Indeed this is often 
urged. Statesmen, it is said, had correctly estimated 
this force in making their calculations. But we have 
high authority for the proposition that some astute 
socialists counted on no such outcome. We are told 
by Zinoviev, in his brief life of Lenin, that neither 
of them expected the complete breakdown of the 
German Social Democrats. These two men were 
together in Galicia when the war broke out. As 
soon as the news reached them Zinoviev said to his 
friend: "You will see, the German Democrats will 
not dare to vote against the war, but will abstain 
in the vote on war credits." To this Lenin replied: 
"No, they are not such scoundrels after all. They 
will not, of course, fight the war, but they will, to 
ease their conscience, vote against the credits in 
order that the working class may not rise against 
them." Zinoviev then goes on with the story: 
"In this case Lenin was wrong and so was I. 
Neither of us had taken the full measure of the 
flunkeyism of the Social Patriots. The European 
Social Democrats proved complete bankrupts. 
They all voted for war credits. When the first 
number of Vorwarts, the organ of the German 
Social Democrats, reached us with the news that they 
had voted the war credits, Lenin at first refused 
to believe. 'It cannot be,' he said, 'it must be a 
forged number. Those scoundrels, the German 
bourgeois, have specially published such a number 



SOCIALISM AND LABOR MOVEMENT 205 

of the Vorwarts in order to compel us to go against 
the International.' Alas, it was not so." Thus at 
least two leaders, long associated with international 
socialism, agitators and students, were disillusioned. 

I. SOCIALISTS CONFRONTED BY 
THE REALITIES OF POWER 

It also happened in the economy of things that 
the two men who thus saw a grand mirage fade 
before their eyes in August, 19 14, were destined 
themselves to play leading roles in a drama which 
lifted socialist hopes to high heaven and dashed them 
again to earth. In this connection it is not neces- 
sary to make use of any statements made by enemies 
of Soviet Russia. The course of affairs can be 
traced in the writings of Lenin and his supporters. 
fWe may also accept, for the sake of argument, the 
Bolshevik contention that the counter-revolutionary 
movements, the wars waged against the Bolshevik 
government by enemies within as well as without, 
and the iron blockade imposed by the great powers 
were mainly responsible for the further deteriora- 
tion in the ruin left by the old regime. The Rus- 
sian revolution of November, 1917, opened with 
confident appeals to the proletariat of the world 
to follow the example of Petrograd. The hopes 
of the extremists were raised everywhere. In 
Italy, Spain, Hungary, and Germany, attempts were 
made to emulate the Muscovite example. All this 
stands upon the open record. All these efforts 
failed. As the months passed Moscow was forced 
to admit that it had been deceived, that the world 



206 CROSS CURRENTS IN EUROPE TO-DAY 

was not ripe for a proletarian revolution. Thus 
one great fiction was dissipated. 

Equally significant was the failure of the Bol- 
shevik, system as a recuperative and reconstructive 
force. It did not call forth the productive energies 
of the Russian people. The task of overturning 
the provisional government and seizing the power 
of the state was relatively simple and easy. On the 
morning of victory came the real test, namely, that 
of producing and distributing goods. In this, the 
Bolsheviki confronted new and baffling undertak- 
ings for which neither their philosophy nor their 
technical knowledge fitted them. It has been said 
that the ruins they inherited were almost beyond re- 
pair. That may be granted also for the sake of 
argument. Still with all the machinery of the state 
in their hands, the Russian socialists failed to start 
Russia on the path to recuperation. Hence the nec- 
essity of falling back upon capitalism, modified and 
restrained, if you please, but still capitalism. 

For this, too, we have the words of the Russian 
premier, Lenin. In a speech delivered early in 
192 1 he laid before his communist colleagues two 
alternatives. "We can," he said, "completely pro- 
hibit and prevent the development of private non- 
state exchange, that is, commerce, or in other words 
capitalism, which is inevitable with the existence 
of millions of small producers. Such a policy would 
be stupid and suicidal for the party which attempted 
to carry it out. It would be stupid because it is 
economically impossible. It would be suicidal be- 



SOCIALISM AND LABOR MOVEMENT 207 

cause the party that attempted to carry it out would 
inevitably collapse. It is useless trying to conceal 
the sin into which some communists 'in thought, in 
word and in deed,' have fallen with regard to this 
policy. We shall attempt to rectify this error. It 
is essential that we rectify this error or else it will 
go hard with us." 

Then Lenin presented the other alternative: 
"Or (and this is the only possible and sensible 
policy) we can refrain from prohibiting and pre- 
venting the development of capitalism and strive to 
direct it in the path of state capitalism. This is 
economically possible, for state capitalism exists in 
one form or another everywhere that elements of 
free trade and capitalism in general are to be found.'' 

The implications of this are clear enough. The 
Bolsheviki conquered the power of the state and 
found themselves practically helpless in the presence 
of technical problems of production. It was one 
thing to seize the factories; it was another thing to 
manage them and to carry on all the intricate proc- 
esses of production and distribution. But with 
all the symbols and trappings of state in their hands 
they could not find the secret springs from which 
productive energies flow. They could not, with all 
their decrees and parchment and sealing wax, pre- 
vent the peasant from holding the soil that he tilled. 
They could not set mills, mines, and factories in the 
full swing of operation. They laid the cause of 
their defeat upon the technical and clerical forces 
that committed sabotage against their orders. That 



208 CROSS CURRENTS IN EUROPE TO-DAY 

too may be conceded for the sake of argument. 
But the fact remains that the first great communist 
state established in the world had to go back to a 
modified form of capitalism within the brief period 
of four years. 

The disillusionment that marked this process was 
accompanied by the practical lesson that decrees are 
not bread and that phraseology makes no boots. If 
the return was resisted by any considerable body of 
communists in Russia, the news of the fact has not 
reached the western hemisphere. As far as the 
English were concerned, a visit of the delegates of 
the British Labor Party to Petrograd was sufficient 
to dissipate any ardent hopes for an immediate 
millenium on the Russian principles. Only a small, 
intransigent party in Germany, the Communist 
Labor party, clung to the primitive gospel of the 
pure word. It declared solemnly, late in 192 1, 
that "the Soviet Government of Russia has ceased to 
be a Proletarian government by reason of its con- 
cessions to the peasants. . . . The Soviet Govern- 
ment, forced by economic circumstances to intro- 
duce capitalism into the country, becomes itself the 
representative of capitalism." As for the rest of 
the socialist world, the fond hope that the conquest 
of power by the proletariat would automatically 
bring something like the millenium or at all events 
an endurable system of production has vanished. 
Little groups of obdurate communists may defy 
Moscow, but facts are what they are. And it is 
with facts that the historian has to deal. 



SOCIALISM AND LABOR MOVEMENT 209 

II. SOCIALISM AND THE CENTRAL 
POWERS 

Scarcely less disappointing to the socialists of all 
countries was the failure of the German Democrats 
to make the most of their power in the days of their 
revolution. On the 9th of November the author- 
ity of the German state in effect passed into the 
hands of an extra-legal council composed of Social 
Democrats and Independents. The first revolution- 
ary government was composed entirely of socialists. 
Nevertheless no steps were taken in the direction 
of socialization. The proposal that the socialists 
should proceed to an economic revolution by means 
of soldiers and workers councils was rejected under 
Social Democratic pressure. Instead, a national as- 
sembly was summoned with the full knowledge that 
there would not be a socialist majority in such a 
body. That was not all. Leaders among the 
Social Democrats, finding themselves in the seats of 
the mighty, in positions of full responsibility, openly 
opposed all radical programs for socialization. 
On November 19, 191 8, the Freiheit declared that 
there was no doubt about the possibility of trans- 
forming the great industrial monopolies into com- 
mon property. A few days later Ebert, the social- 
ist chancellor, replied by denouncing the "vision- 
aries" who demanded an immediate socialization of 
German industries and warned the people against 
"experiments." The official commission on social- 
ization declared that the "first condition of all eco- 



2IO CROSS CURRENTS IN EUROPE TO-DAY 

nomic reorganization was the revival of production," 
as if to say that socialization would not lead to such 
a revival or was not even necessary to it, as urged 
by socialists of the left. This negative position 
was defended on many grounds. It was said for 
instance that the socialists should not become the re- 
ceivers for bankrupt capitalism and that the time 
was not ripe for the transition. 

The truth is that the German socialists, instead 
of presenting a compact front to capitalism on the 
day of the revolution were hopelessly divided as to 
goals and tactics. They had been divided all dur- 
ing the War. Party rules made the vote for mili- 
tary credits on August 4, 19 14, appear unanimous on 
the record, but it was known that fourteen votes had 
been cast against the government in , the party 
caucus at which the action had been decided upon. 
The division thus made manifest increased with 
time. In 19 16 a separate group known as the 
Social Democratic Alliance made its appearance. In 
April of the next year, an Independent Social Demo- 
cratic party was organized. In the meantime there 
had grown up a formless and illegal group still 
more radical and bearing the name of Spartacus. 
The failure of the Social Democrats and the Inde- 
pendents to bring about the long-heralded proleta- 
rian revolution in 19 18, led to the formation of a 
German Communist party modelled on the Russian 
lines and advocating Russian methods. 

The Communist party was only a little more than 
a year old when signs of cleavage began to appear 
within its ranks. These became marked in the 



SOCIALISM AND LABOR MOVEMENT 211 

spring of 1920 just after the attempt of Kapp and 
Liittwitz to restore the monarchy. Seeing that the 
radicals were likely to play into the hands of the 
reactionaries, the executive committee of the Com- 
munist party issued a statement (March 21, 1920) 
to the effect that the time was not ripe for a dic- 
tatorship of the proletariat and that political action 
was appropriate for the hour. This incensed a 
large number of the intransigents, who clung fer- 
vently to the Moscow program. The result was the 
formation of the German Communist Labor party 
at a Congress held on April 4, 1920. The new 
organization approached the authorities of the 
Third International and while not formally admitted 
was at first treated kindly and granted a consultative 
vote. 

Not convinced that a proletarian dictatorship 
was yet a forlorn hope in Germany, the extreme com- 
munist left wing undertook to overthrow the capi- 
talist system by a general uprising in March, 192 1. 
There was serious fighting in a number of industrial 
centres, but the revolt was put down. The mem- 
bers of the right wing in the Communist party de- 
nounced the attempt as foolish and as the inevitable 
result of "infantile" tactics. The extremists an- 
swered by saying that, although it failed, the upris- 
ing marked another battle in the grand world-wide 
campaign against capitalism. 

In this state of affairs, an appeal was made to 
Moscow, and in a letter of August 14, 192 1, Lenin 
read the German communists a lesson. He advised 
them to close up their ranks and quit quarrelling. 



212 CROSS CURRENTS IN EUROPE TO-DAY 

He urged them not to give so much attention to the 
new Communist Labor party, not to advertise it, 
not to attack it. "They are too lacking in sense," 
he said, "to be taken seriously, whilst it would be 
wrong policy to be angry with them. . . . The in- 
fantile disease of 'Leftism' will pass and will be 
completely overcome with the growth of the move- 
ment." He also informed them that although the 
March uprising had added to their knowledge, the 
communist movement in the majority of countries 
was far from the goal of its endeavors and not pre- 
pared for a successful overturn of the established 
order. 

This letter stirred the Communist Labor party to 
wrath. At its congress held in September, 192 1, 
it accused the Russian Soviet Government of desert- 
ing its post and acting as manager for the bourgeois 
revolution. The congress therefore proposed a 
Fourth International based on left-wing communism. 
In its official organ, the Communist Labor party laid 
down three propositions: ( 1) The Third Interna- 
tional has betrayed the proletariat and has become 
the instrument of the bourgeois against the proletar- 
iat. (2) The Third International betrayed the 
proletariat by handing over the leadership of the 
Proletarian International to the Russian state and 
its leaders. (3) The Soviet government of Russia 
has ceased to be a proletarian government by reason 
of its concessions to the peasants. . . . The soviet 
government forced by economic circumstances to in- 
troduce capitalism into the country, becomes itself 
the representative of capitalism." Proceeding from 



SOCIALISM AND LABOR MOVEMENT 213 

these fundamental propositions, the German Com- 
munist Labor party feels obliged to establish a new 
international, to "build upwards from below a real 
soviet international." The strength of the party 
was reported as being 36,000 in October, 192 1. 
The confidence of its leaders is, however, unshak- 
able. The conquest of the world is still their fixed 
goal. 

So for one reason or another, the German social- 
ists, divided into fiercely contending factions, let the 
crisis of the revolution pass by without making a 
concerted, determined effort to bring about the 
great socialist transformation which they had long 
promised. The Social Democratic government 
turned all the forces of state loose upon the ex- 
tremists who sought to follow the Russian example. 
By the irony of circumstances, private property was 
protected by socialist bayonets and communist up- 
risings were suppressed by socialist troops. It is 
true that the Social Democrats made a deep impress 
upon the new constitution drawn up at Weimar, in 
19 19, but it will not be forgotten that they were 
driven to the most radical proposals, namely, those 
creating workers' councils, by a general strike. It 
is true also that, subject to similar pressure, the 
principle of nationalization for coal mines was ac- 
cepted, but declarations and executions are two dif- 
ferent things. When due recognition is given to the 
socialist clauses and phrases in the new constitution, 
it remains a fact that the Social Democrats of Ger- 
many, with all their power in the state, made little 
or no impress upon the system of capitalist economy. 



214 CROSS CURRENTS IN EUROPE TO-DAY 

With good reason could a socialist writer lament in 
192 1 : "The chief characteristic of our present 
economic condition is not only increased profits for 
capitalists, but the extraordinary concentration of 
capital in the hands of individual industrial magnates 
who have actually become the sovereigns of our eco- 
nomic life." Ebert is the president of Germany. 
Stinnes is the ruler of Germany. 

In the other defeated countries, socialists and 
communists had a slight taste of power. The down- 
fall of the old empire in Hungary was followed by 
the formation of a coalition government under 
Count Karolyi, which included three socialist minis- 
ters. This administration did not last long. De- 
feated in its efforts to obtain Allied aid, the Karo- 
lyi group turned the government over to the com- 
munists, headed by Bela Kun, in March, 1919. A 
soviet republic was then established, accompanied by 
great disturbances and extreme measures. It was 
assailed by Rumanian and Czechoslovak troops. It 
was attacked by a royalist faction. It was under- 
mined by the Allied representatives in Hungary 
who entered into communication with the more 
moderate socialists and held out hopes of recogni- 
tion from foreign powers in case the Kun gov- 
ernment were ousted. On promises of immunity 
from prosecution, the Kun ministry retired in favor 
of the Social Democrats. Immediately a white 
terror was inaugurated which ended in the reaction- 
ary dictatorship of Admiral Horthy. The persecu- 
tion and punishment of radicals was then carried to 



SOCIALISM AND LABOR MOVEMENT 215 

great length. Militant socialism was stamped out 
in blood. 

In Austria, the Social Democrats played a role 
similar to that of their colleagues in Germany. 
Though they had opposed the declaration of war on 
Serbia, they came to the support of their govern- 
ment as soon as Russia entered the lists. If they ac- 
complished less in the political sphere than did their 
brethren in Berlin, it was largely because the Aus- 
trian ministry carefully avoided calling parliament 
together during the early period of the war. It 
was only after a socialist, Adler, had shot the 
premier that the representatives of the people were 
summoned once more to take part in the govern- 
ment. By that time the movement in favor of 
peace had grown to immense proportions. In Janu- 
ary, 191 8, there was an ominous general strike. In- 
dustrial disorders, mutinies, and desertions marked 
the months that followed until the collapse. 

In the new provisional government formed after 
the downfall of the monarchy, the leadership was 
taken by a Social Democratic premier and until the 
autumn of 1920 the socialists participated in the 
administration. During this period socialists and 
trade unionists were in virtual possession of the 
capital but the capital had been paralyzed by the 
disruption of the Austro-Hungarian empire. The 
radicals, in these circumstances, could do little more 
than operate the presses and print paper money. By 
repeated strikes they kept their wages rising with 
the flood of currency leaving the bourgeois to suf- 



2l6 CROSS CURRENTS IN EUROPE TO-DAY 

fer as the buying power of their salaries diminished. 
There was, of course, a limit to this, and as time 
went on the socialists found out that they were help- 
ing to serve as the receivers of a bankrupt system 
which they could not reconstruct. Powerless even 
when possessing the symbols of power, they at 
length gave up the prerogatives of office and assumed 
the more congenial role of opposition. This may 
have been good party tactics, but it did not advance 
the socialist commonwealth of which they had so 
long dreamed. 

III. SOCIALISM AMONG THE 
VICTORS 

Among the victors in the war, Italy alone wit- 
nessed an active attempt on the part of the com- 
munists to socialize industries by seizing the fac- 
tories. This was not a novel thing in that king- 
dom. As far back as 1904, there had occurred a 
general strike in the north of Italy which culmi- 
nated in the capture of the city of Milan by the 
socialists. Giolitti, who was then prime minister, 
refused to get excited. He would not use the troops 
against the strikers. In fact he employed them in 
preventing improvised citizen guards from attack- 
ing the radicals. His Fabian tactics proved to be 
successful. The strikers could cut off water, light, 
and power and they could seize the factories, but 
they found that, when they had the machinery of 
production without the markets, raw materials, capi- 
tal, or technical leadership, they had nothing which 



SOCIALISM AND LABOR MOVEMENT 217 

would produce food and clothing. After a few days 
they surrendered. 

Sixteen years later, the Italian radicals made a 
similar attempt with identical results. The Social- 
ist party of Italy adopted communist principles and 
in the elections of 19 19 captured 2500 communes as 
against about 400 carried in the campaign of 19 13. 
Thus encouraged the Italian communists, in several 
industrial cities, thought the time ripe to follow the 
Russian example. So they seized the factories, ex- 
pelled the proprietors, and proclaimed the dictator- 
ship of the proletariat. Strange to say, Giolitti 
was then enjoying once more a brief tenure of power 
and he resorted to the tactics that had been so effec- 
tive in the earlier crisis. He shed no blood. He let 
the communists hold the undisturbed possession of 
machinery and brick walls for several days until their 
ardor cooled under the stress of managerial ex- 
periences. 

The Italian citizens, however, were not as cool as 
the government. All over the country, self-styled 
patriots, known as Fascisti, formed bands and made 
war on the radicals. There was a great deal of 
street fighting and many outrages were committed 
on both sides. In this civil conflict also, the Italian 
government usually assumed the role of a disinter- 
ested spectator. At the close of 192 1 a tentative 
accord was reached between the leaders of the Fas- 
cisti and the socialists, but the rank and file have not 
always observed the precise terms of the truce. 

In France, the historic home of revolution, social- 
ist enterprises since 19 14 have been of a mild char- 



2l8 CROSS CURRENTS IN EUROPE TO-DAY 

acter. In the election of November, 19 19, the 
socialists polled 300,000 more votes than in 19 14, 
but owing to the operations of the new "propor- 
tional representation" law, the number of their 
seats in the Chamber of Deputies was cut from 
101 to 65. Their strength was further dissipated 
by internal troubles. Long before the war there 
had grown up in the socialist and labor movements 
of France a party known as "Syndicalists" whose 
principles foreshadowed those of the Russian revolu- 
tion of November, 19 17. This group opposed 
parliamentary politics. It held that politicians 
could not transform a capitalist society into a 
socialist order. It declared that the revolution 
could only be effected by organized workingmen 
prepared to seize the means of production through 
a general strike and direct action. In practice this 
meant a soviet government purely economic in char- 
acter. It is not surprising, therefore, that with such 
a movement under way, the French socialists voted 
in their national convention of December, 1920, 
to adhere to the Moscow program and the new In- 
ternational. The only thing approaching direct ac- 
tion, however, was a general railway strike which 
failed and called forth a decree dissolving the Gen- 
eral Confederation of Labor. Four years of war 
and three years of peace left socialism and organ- 
ized labor in France torn by internal dissensions 
and weakened in both the economic and political 
fields. 

In contrast to the broken lines of socialism in Ger- 
many, Italy, and France, the English labor move- 



SOCIALISM AND LABOR MOVEMENT 219 

ment, once the despair of the continental social 
democrats, presented extraordinary unity and 
strength. During the war its numerical gains were 
large. In the election of 191 1, the Labor Party 
candidates received 370,000 votes; in 19 18 they 
polled 2,244,000, an immense increase even when 
allowance is made for woman suffrage. In addition, 
the Labor Party strengthened its position by adopt- 
ing a carefully worked-out and moderate program 
which appealed to a wide constituency not identified 
with labor in the strict sense of the term. It an- 
nounced as its aims: ( 1 ) to secure for the producers 
by hand and brain the full fruits of their industry 
and the most equitable distribution thereof that 
may be possible, upon the basis of common owner- 
ship of the means of production and the best obtain- 
able system of popular administration and control 
of each industry or service; and (2) generally to 
promote the political, social, and economic emancipa- 
tion of the people." 

The Labor Party opposed revolution by violence 
and advocated the gradual application of its pro- 
gramme through education, political activity, co- 
operation, and labor organization. It announced a 
number of specific measures designed to guarantee 
a minimum of subsistence to all: democratic con- 
trol of industries, a better distribution of the bur- 
dens of taxation, the prevention of vast accumula- 
tions of wealth in the hands of private parties, self- 
government for all peoples under British dominion, 
municipal and national ownership of public utilities, 
and peaceful relations with other nations. There 



220 CROSS CURRENTS IN EUROPE TO-DAY 

was, of course, a group of Communists in England 
that rejected this moderate program and adopted 
the philosophy of Moscow, but the members of this 
organization were few in number and slight in in- 
fluence. 

The English trade unions hitherto very conserva- 
tive have more than tripled their numbers since 19 14 
and have consolidated many of the crafts, thus 
taking long strides toward the realization of 
the "one-big-union" idea. The leaders, however, 
shrank from a general strike in 192 1 when the 
miners called upon them for help in their fight 
against wage reductions. The paralysis of foreign 
trade and industry which fell upon the country 
in 1920 gave the labor leaders pause in 
their ambitious plans for united action. It may be 
that discretion, viewed in the large, was the better 
part of valor and brought strength rather than 
weakness to the labor movement. At all events 
England has witnessed no disruption and disillusion- 
ment among socialists and trade unionists compar- 
able to the state of affairs on the continent. This 
may perhaps be attributed in part to the fact that 
the English socialists have attempted as yet no ex- 
tensive application of their doctrines and in part to 
more astute and ambitious leadership. Still the 
fact stands. 

IV. INTERNATIONAL SOCIALISM 

The war and its aftermath had a disastrous effect 
upon such unity as the international socialist move- 
ment possessed before the cataclysm. The first In- 



SOCIALISM AND LABOR MOVEMENT 221 

ternational Working Men's Association, it is well 
known, had been established in 1864 with a program 
formulated by Karl Marx. That association lasted 
for twelve stormy years. It adopted a definite 
socialist policy in 1869, and its representatives took 
an active part in the Paris commune of 1871. The 
disaster which overwhelmed the commune, the 
wrath generated by the defeat, and the conflict be- 
tween the socialist and the anarchist members pro- 
duced a bitter internal strife in 1872 which ended 
in the expulsion of Bakunin, the anarchist leader, 
and the disruption of the Association. The socialist 
wing, which clung to the sinking ship, moved the 
headquarters to New York and after a final confer- 
ence in 1876 gave up the ghost. The First Inter- 
national was dead and there seemed to be no possi- 
bility of resurrection. 

More than ten years passed. In 1889, six years 
after the death of Marx, two significant interna- 
tional labor conferences were held in Paris and in 
1 89 1 the two bodies united. Thus the Second Inter- 
national came upon the scene. It admitted to mem- 
bership two different groups of persons. In the 
first category were "all associations which adhere to 
the essential principles of socialism: — socialization 
of the means of production and exchange, interna- 
tional union and action of the workers, conquest of 
public powers by the proletariat, organized as a class 
party." In the second category were "all labor 
organizations which accept the principles of the class 
struggle and recognize the necessity of political ac- 
tion (legislative and parliamentary) but do not par- 



222 CROSS CURRENTS IN EUROPE TO-DAY 

ticipate directly in the political movement." The 
Second International held world conferences every 
three or four years and maintained a permanent or- 
ganization consisting of two delegates from each 
nation. At the general conventions socialist prin- 
ciples and tactics were discussed and attempts were 
made to draw the socialist groups of the world into 
ever closer unity. Many and bitter were the de- 
bates at these assemblies but by shrewd parliamen- 
tary methods and the clever use of rhetorical 
devices the Second International held together 
and seemed to grow stronger with the lapse of 
time. 

Among the questions which agitated the Second 
International none was more controversial than the 
attitude which socialists should take toward war. 
The Communist Manifesto had declared: "The 
workers have no country. What they have not got 
cannot be taken from them." On this general 
theory, many socialists opposed all wars under all 
circumstances. Extremists of this type, proposed 
to the Second International a resolution favoring 
the general strike as a means of preventing war. 
This radical solution of the problem was hotly de- 
bated at the Stuttgart congress of 1907 and again 
at Copenhagen three years later. Bitter words 
were passed. Some German socialists, seeing the 
proposal supported ardently by the English socialist, 
Keir Hardie, even suggested that it was an English 
pacifist scheme to weaken the defensive power of 
Germany. 

The outcome of the debate was a rejection of the 



SOCIALISM AND LABOR MOVEMENT 223 

general strike by a vote of 131 to 51. Instead of 
approving this drastic anti-war weapon the conven- 
tion adopted a compromise in the form of a resolu- 
tion containing two parts. The first part declared 
that in case war threatened, the working classes and 
their parliamentary representatives in the countries 
affected, using the International Bureau as a means 
of coordination, should resort to "every effort to 
prevent war by all means which seem to them most 
appropriate, having regard to the sharpness of the 
class war and to the general political situation." 
The second part of the resolution declared that in 
case war actually broke out it would be their duty 
"to intervene to bring it promptly to an end, and 
with all their energies to use the political and econo- 
mic crisis to rouse the masses of the people from 
their slumbers and to hasten the fall of capitalist do- 
minion." Such was the veiled and vague language 
in which the socialists of the world reconciled their 
nationalist aspirations. Such was the official war 
program of the Second International in 19 14. 

In the last days of July, 19 14, the long-dreaded 
black clouds were on the horizon. On July 31st, 
the central committee of the German Social Demo- 
crats, expecting the order for mobilization every 
minute, held a meeting to consider their part in the 
crisis. A decision was taken to send a representa- 
tive to Brussels to see the secretary of the Interna- 
tional, Huysmans, and with him to make a journey 
to Paris. The purpose of the expedition, according 
to Scheidemann, was to hold a conference with the 
French socialists and to reach some conclusion with 



224 CROSS CURRENTS IN EUROPE TO-DAY 

reference to a common declaration in the Reichstag 
and the Chamber of Deputies. The conference 
was held during the evening of August ist. The 
spokesman of the French socialists said to the Ger- 
man representative that the position of the two 
socialist groups was not the same, that the French 
socialists were kept fully informed as to the course 
of events by their government while the Germans 
were not, and that on the part of France it was 
a defensive war. The French made it clear to the 
German spokesman that they intended to vote for 
war credits and to support their government. On 
August 3rd, the German socialists heard the report 
of their representative and after a lively debate de- 
cided to sustain their own government. How much 
weight the report had is, of course, a matter for con- 
jecture. There is evidence in favor of the conclu- 
sion that the decision would have been the same even 
though the French socialists had taken the other 
tack. At all events, the German socialists, like 
the French socialists, voted for war credits. They 
stuck somewhat at giving a "Hoch" for the Kaiser 
but were conciliated by the generous concession of 
the government that the "Hoch" should be for "the 
Kaiser, the people, and the Fatherland." The tide 
of war was booming in along the shore. 

When the clash of resounding arms was heard in 
Europe, the socialist parties in several of the lead- 
ing countries rallied, as did other patriot organi- 
zations to the support of their governments. This 
happened in England, France, Germany, Austria, 
and Belgium. In Russia, Serbia, Italy, Rumania, 



SOCIALISM AND LABOR MOVEMENT 225 

Hungary, and the United States, however, the so- 
cialist parties officially went on record against the 
war and the governments that waged it. Indeed 
in all the belligerent countries there were groups 
that opposed the official action of their parties, 
whether for or against war. In Russia, for exam- 
ple, the right-wing Social Revolutionaries and Social 
Democrats split off and sustained the government, 
while in Germany in the course of time an intransi- 
gent group of Social Democrats broke away from 
the official position of the party on the war. In 
France two lines of cleavage were to be observed. 
There was a very small anti-war faction. There 
was a still larger group who accepted the war but 
believed that socialists should not hold office in the 
government during the conflict. Finally there was 
the majority that favored both the war and direct 
participation in the government. As the conflict 
went on the opposition groups grew in size, and 
during the last months of the war, a majority voted 
against official cooperation within the French 
ministry while still sustaining it in carrying on 
hostilities. 

When the war broke out, Vandervelde, the presi- 
dent of the International, took office in the Belgium 
ministry while Huysmans, the secretary of the Bur- 
eau moved his headquarters to The Hague. 
"The Second International is dead," exclaimed 
Lenin, when he heard that the Social Democrats of 
Germany had voted for the war credits, but Huys- 
mans did his best to hold the retreating regiments 
together. He even attempted to call a new inter- 



226 CROSS CURRENTS IN EUROPE TO-DAY 

national congress, and, defeated in that, he sum- 
moned the socialists of neutral countries to a con- 
vention held at Copenhagen in January, 19 15. 
From this conference an appeal went forth to the 
socialists of the warring nations to stop the 
bloody conflict. The answer to this call was em- 
phatic. The socialists of the Entente powers held 
a meeting in London and declared that the war 
must go on. The socialists of Germany, Austria, 
and Hungary met at Vienna, a few months later, 
and held an academic debate on the international 
relations that should prevail after the war. Against 
both of these patriotic conferences, the intransigent 
minorities opposed to war in the several countries 
protested in vain. If the Second International was 
not dead, as Lenin suggested, it was at least in 
mortal peril of death. At all events its temporary 
dissolution was patent to all mankind. 

Meanwhile the minorities opposed to war were 
active. The Italian Socialist Party, which violently 
objected to Italian participation in the war and re- 
mained dead set against it to the bitter end, took the 
lead in welding together the opponents of the war 
in all countries, belligerent as well as neutral. On 
its initiative, a conference of the dissentients was 
held at Zimmerwald, in Switzerland, September, 
19 1 5. This assembly was attended by radical so- 
cialists from Russia (including Lenin and Zinoviev) 
Germany, France, Italy, Rumania, and some other 
countries. Attendance for many of them was easy 
for they were exiles. Representatives of the Brit- 
ish Socialist Party and the Independent Labor party 



SOCIALISM AND LABOR MOVEMENT 227 

would have gone but they were denied passports by 
the English government. 

The Zimmerwald conference was itself divided 
into right and left wings. All were agreed in their 
opposition to war and they issued an impassioned 
denunciation of the belligerents. But there was a 
left wing, headed by Lenin, that called for a revolu- 
tion as well as an end to the war. To this the Ger- 
man socialist, Ledebour, replied, "It is all right for 
you living here abroad to issue appeals for a civil 
war. I should like to see how you would have done 
it if you had lived in Russia." To this Lenin coolly 
answered: "When the time arrives, we shall know 
how to stand at our posts." In the spring of the 
next year, another conference of the same elements 
was held at Kienthal. There the extremists tri- 
umphed. A call went forth for peace and revolu- 
tion. A bureau for agitation was established. The 
powder train for the Russian revolution was laid. 
The German Imperial Government was pleased at 
the prospect of an uprising in Russia and, it seems, 
aided the Russian revolutionary leaders to get back 
home. At a later date the pleasure was dissolved 
in tears. 

Undismayed by all previous efforts and stirred 
to action by the Zimmerwald-Kienthal conferences, 
the officers of the Second International decided to 
call a general conference at Stockholm for the sum- 
mer of 19 17. The March revolution in Russia 
made the prospect of success more promising. The 
apparent stalemate in the war made all belligerent 
countries more willing to consider some way out of 



228 CROSS CURRENTS IN EUROPE TO-DAY 

the seemingly hopeless deadlock. Departing from 
their previous decisions, the French Socialists, the 
British Labor party, the German Social Democrats 
and the Austrian socialists voted in favor of sending 
delegates to Stockholm. The Petrograd Soviet, 
which had called for an armistice and for peace with- 
out annexations and without indemnities, greeted 
the occasion with congratulations. Representatives 
of the Zimmerwald commission migrated to Stock- 
holm to take part in the proceedings. The stage 
seemed set for the extraordinary spectacle of pri- 
vate citizens from warring countries engaged in 
peace negotiations. 

Naturally enough the proposal called forth vio- 
lent opposition from the patriotic sections of all 
countries. Under the pressure of an excited public 
opinion, the French and British governments refused 
to grant passports to the delegates bound for Stock- 
holm. As a result the convention never met. Dele- 
gates from Austria, Germany, Russia, Holland, and 
the Scandinavian countries appeared upon the scene, 
and many conferences were held among them. 
The German Social Democrats presented an elabo- 
rate peace program based upon the formula of no 
annexations and no indemnities, but after fruitless 
debates all the delegates gave up the enterprise as 
hopeless. The following year, other Inter-Allied 
socialists and labor conferences were called — the 
American Federation of Labor taking part in the 
last — and another statement of war aims was 
drafted. This however only served to emphasize 
the hopeless division of the Second International 



SOCIALISM AND LABOR MOVEMENT 229 

and to demonstrate the futility of its pacific efforts. 

The failure of the Stockholm conference gave 
the signal to the radicals. Denouncing all "social 
patriots," as they called the socialists who remained 
loyal to their governments, the extremists decided 
to form a new International and to invite only 
revolutionary socialists to take part in it. Their 
plans were expedited by the triumph of the Bolshe- 
viki in Russia. On January 24, 19 19, a call for the 
first conference went out by wireless from Moscow 
to the revolutionary workers of the world. All 
"chauvinist socialists" were excluded from the invi- 
tation. In March, radicals from the four corners 
of the earth arrived in Moscow and the congress 
of the new association was opened. Then and 
there the Third International was organized and a 
program calling for revolution on the Russian model 
was adopted. At a second congress held the fol- 
lowing year, twenty-one theses, or conditions of 
membership, were drafted and the revolutionary so- 
cialists of the world were called upon to adopt the 
orthodox creed or go into outer darkness. 

These conditions were precise and admitted of 
little misinterpretation. "The necessity of the pro- 
letarian dictatorship" was proclaimed and adherents 
were required to denounce "not only the capitalists, 
but also their allies, the reformers of every shade 
and color." All the new faithful were called 
upon to "renounce not only social-patriotism but the 
false and hypocritical social-pacifism as well." 
All propaganda and agitation had to be of "a def- 
inite communist character and correspond to the 



23O CROSS CURRENTS IN EUROPE TO-DAY 

program and decisions of the Third International. " 
A relentless war on the Second International was 
proclaimed and made obligatory on the new com- 
munion. An iron discipline was made the rule of 
life. No weaklings, no doubters, no reformers 
were to be tolerated. All offices were to be filled 
and all papers edited by men who deviated not a 
hair's breadth from the prescribed articles of faith. 
A highly centralized form of government was pro- 
vided for the Third International and all members 
were bound by the resolutions promulgated by the 
International itself and by its executive committee. 
"The Communist International has declared war 
on the whole capitalist system and the old yellow 
Social Democratic parties." The domestic revolu- 
tion is to be wrought by a disciplined working class 
not afraid of violence and dictatorship. Imper- 
ialism is to be renounced and the various countries 
are to grant independence and self-government to 
the dominions. Parliamentary action is to be per- 
mitted but merely as a form of propaganda. Such 
was the program of the Moscow International. 
Socialists of the world were called upon to accept 
or reject it as a whole without quibblings or reser- 
vations. Within a few months the French Social- 
ist party, the German Independents, a section of 
the Italian Socialist party, and small socialist frag- 
ments in many other countries, accepted the terms 
and entered the Third International, but by that 
time the power of revolutionary socialism had begun 
to wane. 

Meanwhile the Second International had begun 



SOCIALISM AND LABOR MOVEMENT 23I 

to show signs of renewed vitality. In February, 
19 19, a general conference was held at Berne with 
the representatives of nearly all the old affiliated 
organizations in attendance. Little was accom- 
plished at this convention beyond a searching debate 
on the responsibility for the war and the merits of 
Bolshevik tactics. The conference went on record, 
however, as opposing dictatorship by a section of 
the working class and favoring accepted democratic 
methods for establishing the socialist order. A 
second convention, held at Geneva during the next 
year, worked out a new and elaborate statement of 
socialist aims and tactics, following the program of 
the British Labor Party rather than that of Mos- 
cow. The dictatorship of the proletariat was ut- 
terly rejected and the methods and processes of 
modern democracy were declared appropriate and 
essential to the realization of a socialist common- 
wealth. At the same time, the idea of a vocational 
parliament, representing trades and professions, was 
endorsed on the understanding that ultimate sover- 
eignty must rest in the political assembly elected by 
universal suffrage. 

After the Geneva conference of 1920, negotiations 
were started for a union of the two internationals. 
Moscow became less pontifical. The right wing 
moderated its criticism. On April 2, 1922, repre- 
sentatives of the Second and the Third Interna- 
tionals, with spokesmen for the middle group, known 
as the Two-and-one-half International, met in the 
Reichstag Building in Berlin and adopted provisional 
measures looking toward a reunion. 



232 CROSS CURRENTS IN EUROPE TO-DAY 

V. INTERNATIONAL TRADE 

UNIONISM 

In making a survey of the labor movement as a 
whole it is necessary to distinguish sharply between 
the socialist or political phase and straight trade 
unionism. By no means all the trade unionists of the 
world were socialists in 19 14. In America and in 
England relatively few of them were. In Ger- 
many the unions were divided into groups according 
to their political affiliations. There were, for ex- 
ample, Social Democratic unions and Catholic 
unions. In spite of their great divergences in poli- 
tics, however, the trade unions of the various coun- 
tries often cooperated closely in economic and politi- 
cal battles and they were united in a grand Interna- 
tional Federation of Trade Unions, formed at Co- 
penhagen in 1901. This world organization was 
able to hold together and function only by abstain- 
ing from debates about controversial political and 
social questions. It declared that the object of its 
conferences was "to consider the closer union of 
the trade unions of all countries, uniform trade 
union statistics, mutual help in economic struggles, 
and all questions in direct connection with trade 
union organization of the workers." It was ex- 
pressly agreed that "all theoretical questions and 
those which affect the tendency or tactics of the 
trade union movement in the separate nations will 
not be discussed." Under this program 7,394,- 
000 trade unionists were federated in 19 12, those 
of the United States being included. 



SOCIALISM AND LABOR MOVEMENT 233 

During the Great War, this International Fed- 
eration of Trade Unions was practically dormant, al- 
though a few conferences of neutrals were held. 
In fact it was split along definite lines. There was 
a Central Powers section, an Allied section, and 
a neutral section. In these circumstances nothing 
could be accomplished. Within the several nations, 
however, the trade unions made strides in seven 
league boots. Their numbers were immensely in- 
creased. In Germany the membership affiliated 
with the International rose from 2,553,000 in 19 12 
to 8,500,000 in 1920. In Great Britain the affili- 
ated membership grew from 874,000 to 6,500,000 
during the same period. In the meantime the trade 
unionists had augmented their powers through the 
terms and conditions which they had been able to 
wring from the belligerent governments. In a war 
of steel and chemicals, the producers and carriers 
of goods are as essential as the soldiers at the 
front — and not subjected to the same iron discipline. 
So the trade unions of Europe emerged from the 
war more numerous and more influential than ever. 

Shortly after the signature of the Treaty at Ver- 
sailles in 19 19, the dismantled International Trade 
Union Federation was restored to working order. 
The new organization, contrary to tradition, did not 
restrict itself to unionism pure and simple. It 
called for a complete program of labor legislation, 
for the socialization and international control of 
raw materials, and for radical measures against war 
in the future. It favored "international mass ac- 
tion in the assault on reaction, in declaring war 



234 CROSS CURRENTS IN EUROPE TO-DAY 

against war, and for the realization of a new social 
system." This was too extreme for Mr. Samuel 
Gompers, head of the American Federation of 
Labor, and he carried his organization out of the 
world Federation, denouncing it in round terms. 
On the other hand, it was too conservative for 
Moscow; so the Russian unions proceeded to form 
a "revolutionary international trade union organiza- 
tion." This effort bore little fruit. The regular 
International announced that its membership in 
1920 without the United States was 23,662,000 
against a membership of 7,394,000 in 19 12 when 
it included the 2,000,000 American unionists. The 
"Red" trade union international seems to have made 
no gains worthy of record. 

VI. SOME GENERAL REFLECTIONS 

After this general survey, it must be conceded 
that it is perilous to draw any very large conclusions 
as to the present status of the socialist and labor 
movements throughout the world. Over against 
slight retrocessions in political strength in some 
countries must be set immense gains in others. Or- 
ganized labor has multiplied its membership more 
than four fold bringing up the world total to 
nearly thirty millions. Notwithstanding the so- 
called "liquidation of labor" during the business 
crisis, there has been no such reduction in member- 
ship as has occurred in previous panics. The in- 
ternational organization of trade unionists is far 
more radical in its economic views than before the 
Great War and labor from only one country, the 



SOCIALISM AND LABOR MOVEMENT 235 

United States, rejects its program. If the failures 
of communism in Russia, Italy, and Hungary and 
the shortcomings of the Social Democrats in Ger- 
many and Austria seem to warrant the rejection of 
socialism as an impossible dream, the voters in the 
working class quarters of Europe do not seem to 
have discovered it. It may be, as many writers 
contend, that Karl Marx is dead; but the rejoinder 
may also be made with equal force that Cobden and 
Bright are dead also. 

It is doubtless true that a large number of 
socialists who hoped to spring into the millenium by 
means of a sudden revolution have been disillu- 
sioned. It is equally true that there has come about 
as a result of the past seven years' experience a 
thoroughgoing reorganization of socialist thought. 
When socialists were mere obstructionists and op- 
ponents, they could talk grandly about the great 
day in the distant future when the cooperative com- 
monwealth was to be established. Their programs 
had little relation to reality. Their platforms had 
nevej been shaped with reference to the contingency 
of an actual revolution that would sweep socialists 
into power. Their manifestos usually consisted of 
two parts. In one part were included their imme- 
diate demands, such as the eight hour day, universal 
suffrage, and other "bourgeois reforms." In the 
other part, in somewhat pontifical style, appeared 
the philosophy of inevitability — the revelation of 
the joyful day when the death knell of capitalism 
would be rung out and the new world would be born 
in the shell of the old. If anyone, of a practical 



236 CROSS CURRENTS IN EUROPE TO-DAY 

turn of mind, asked what actually would be done 
on that great day, he was set down as a doubter 
in the house of the faithful. He was answered by 
references to "natural processes," "the disappear- 
ance of the state," and "the end of class distinc- 
tions." "In the place of the old bourgeois society," 
ran the prophecy of the Communist Manifesto, 
"with its classes and class antagonisms, an associa- 
tion appears in which the free development of each 
is the condition for the free development of all." 

When, however, Ebert, Scheidemann, Lenin, 
Trotzky, and their comrades were swept into power 
by forces not conjured up by their oratory, they 
found the great day at hand and with it taxes to 
collect, pay rolls to meet, railways to manage, fac- 
tories to operate, and few hundred thousand other 
things to do. In all the vast range of socialist 
literature there was scarcely a hint as to the line of 
actual conduct to pursue. Such was the irony of 
fate that they had to turn to capitalist rather than 
to socialist literature for guidance. They laid 
Marx on the shelf and took a course in the Taylor 
system of efficiency management. They found that 
the wrath of man might praise the Creator but 
could not produce a potato or move a freight engine. 
Rhetoric does not build houses. Party programs 
do not make plows. Logic, philosophy, and He- 
gelianism do not install power plants. The social- 
ists learned that they had been thinking in terms 
of the old politics and the old statescraft and that 
the possession of the pomp and circumstances of 
power did not automatically set in motion the com- 



SOCIALISM AND LABOR MOVEMENT 237 

plex productive processes of national life. The 
effect of this experience, bitter and disillusioning as 
it was, had a deep influence upon socialist thought. 

This influence can be traced fully in the economic 
literature of Germany siince 191 8. Before the revo- 
lution, the German socialists seldom used the word 
"socialization," and perhaps never the verb "so- 
cialize." Now Socialisierung is the order of the 
day. The failures in Russia and Germany forced 
the Socialists to accept the bourgeois challenge to 
produce evidences of practical power and practical 
understanding, and they have been busy recasting 
their literature. They are writing on exactly how 
industries may be taken over by society, organized, 
managed, and made more productive. They are 
discussing the role of workers councils, technicians, 
entrepreneurs, and capitalists. They are writing on 
foreign trade, productivity, wages under socialism, 
the distribution of output, autonomous industrial 
corporations, the dangers of bureaucracy, vertical 
and horizontal trusts, finance, transportation, and 
agriculture. There is now a new note of reality in 
their speculations. They know by experience that 
the red flag may proudly wave over a starving popu- 
lation and all power does not proceed from occu- 
pants of swivel chairs in government buildings. 

What will be the effect of this? Who can 
answer? One or two suggestions may be ventured. 
As the socialists lay aside the rhetoric of academic 
philosophy and politics and adopt the language of 
production and management, they will be writing 
and talking about things which capitalists and busi- 



238 CROSS CURRENTS IN EUROPE TO-DAY 

nessmen can understand. Their ideas will begin to 
circulate in spheres hitherto closed to them. If 
there is reality in what they have to say, if there is 
force of fact behind their argument, they cannot 
fail to produce a profound impression on the eco- 
nomic thought of all classes. On the other hand, 
this very process of hard thinking about reality, will 
itself have a disintegrating influence upon the pon- 
tifical assurance of socialist dogma. Thus the 
philosophy of capitalism and socialism will have new 
points of contact and a larger spirit of compromise 
may enter into the contests of the future. 

Whatever may be the influence of social philo- 
sophy upon the conduct of human affairs, two facts 
appear indelibly upon the record of the recent past. 
When the ruling classes of two great empires — ■ 
Russia and Germany — went into bankruptcy as the 
outcome of the First World War, it was only 
socialist parties that had the power and will and 
organization necessary to seize and hold the gov- 
ernment. Those who are given, with Volney, to 
meditations upon the ruins of states will be moved 
to speculate upon the possible role of socialism and 
organized labor at the end of the Tenth World 
War. 






IX 

AMERICA AND THE BALANCE OF 
POWER 

''•TN the beginning was the deed," wrote the. wise 
X poet. Activity yet remains the essential thing 
in the life of mankind. Political speeches, ad- 
dresses on foreign policies, and Fourth of July ora- 
tions exert little influence on the course of human 
affairs, save occasionally in time of a crisis when the 
spoken word indicates a line of action to be fol- 
lowed. The fate of a nation — its destiny — lies not 
in words but in deeds. The nation lives by work 
not by rhetoric. It is no detraction from the high 
honor rightly ascribed to the Fathers of this re- 
public -to say that, well as they built, they alone did 
not make America. Our America was made by the 
pioneers, men and women, who levelled the forests, 
laid out the roads, tilled the fields, and carried 
American life to the Pacific, and by the capitalists 
and laborers who constructed and operated the steel 
mills with their roaring furnaces and the spinning 
mills with their flying spindles. I do not mean to 
say that concepts of life and duty do not underlie 
this fabric of human endeavour, but merely that the 
majestic signs of power are the outcome of activity. 
So, whoever fain would divine the fate of a na- 
tion must ponder deeply its activity. It is not what 

239 



240 CROSS CURRENTS IN EUROPE TO-DAY 

we say about the sea that counts; it is what our 
sailors do upon the seas. It is not our academic 
theories about finance that carry weight in the coun- 
cils of nations; it is our dollars and our cents that 
imperatively command the attention and wholesome 
respect of those engaged in the counting houses of 
the earth's great cities. It is not what President 
Harding thinks about China or what John Hay has 
written about China that will shape the coming fate- 
ful years in the Pacific; it is what our merchants, our 
capitalists, our railway builders, and our money 
lenders do in China tbat will set the problem for 
the rising generation. 

Now America is primarily an industrial and a 
trading nation. Its prime activities are connected 
with the production and sale of goods. It has no 
landed nobility to cultivate the graces of leisure. 
It has no military aristocracy devoted to the exer- 
cise of arms. Napoleon once sneered at the nation 
of shopkeepers, but it was the sneer of jealousy, and 
the Anglo-Saxon is proud of the term of contempt 
thus flung at him. Whether this pride is warranted 
or not, whether the virtues of trade — those bour- 
geois virtues so scorned of the emancipated — are 
really virtues, is a matter for the theologian and 
the ethical teacher. The fact remains. America 
is an industrial and trading .nation. Our activities 
at home and abroad are mainly related to these es- 
sential elements in our national life. Here then 
is the key to our domestic history and to our future 
foreign policies. Our empire of trade extends to 
the four corners of the world. It stretches out 



AMERICA AND BALANCE OF POWER 241 

under many flags and many governments. Those 
working at its periphery, under the pressure of eco- 
nomic laws, make the conditions with which Ameri- 
can foreign policy must deal. They create the stern 
and solemn facts with which statesmen and poli- 
ticians must reckon. 

Moreover, recent circumstances have given a new 
turn to the significance of business. Many nations 
of antiquity in the course of their history came to 
rely upon the food supplies brought from distant 
lands. Rome in her imperial days was fed by 
wheat carried from her uttermost provinces; when 
this supply was cut off and the fields of Italy failed 
to make good the shortage, the staff of life failed. 
The new nations and new states that rose upon the 
foundations of Rome were almost self-sufficing. At 
all events they could feed their population by food 
grown within their own borders. With the advent 
of the machine age, this fortunate condition was 
lost by the leaders in invention and manufacture. 
In 1 9 14 neither England nor Germany could main- 
tain a standard of living for the laboring population 
without drawing heavily upon the granaries of 
America and Russia. The huge populations, called 
into being by the opportunities of industry, consti- 
tuted a growing pressure upon the agencies of busi- 
ness and of government compelling them to extend 
and maintain foreign markets. This naturally 
drove the seekers for markets into the backward 
places of the earth where industry had not pene- 
trated or had made little advance. For nearly a 
century England had no formidable rival in this 



242 CROSS CURRENTS IN EUROPE TO-DAY 

imperial enterprise, then one after another com- 
petitors appeared upon the world stage — Germany, 
Japan, Italy, France, and the United States. Even 
in China and India the whirr of the spindle and the 
clank of the loom were heard ringing out the fate 
of Lancashire cotton mills. Here were the roots of 
imperialism, armaments, and warfare. Those who 
asked where t this all would finally lead and what 
would be the outcome when every nation became in- 
dustrial were silenced by the inexorable demands of 
current business. After us the deluge! 

In this swiftly drifting world economy, the 
United States occupies a peculiar position. From 
one point of view it is very fortunate. It can feed 
its immense population with almost every kind of 
product from oranges and sugar to wheat and 
bacon. It can clothe its people with the cotton of 
the South and, did exigencies again demand, with 
wool from the sheep ranges. Considered abstractly 
it could be a self-sufficing nation. But considered 
practically, it is, as things now stand, dependent 
upon foreign trade, if not for a livelihood, at least 
for what is called "prosperity." It is the city popu- 
lations of England and Germany that must have 
markets abroad and import food supplies. In the 
United States, the wheat and corn grower of the 
West, the cotton grower of the South, as well as the 
maker of silks in Patterson or the manufacturer of 
steel in Pittsburg, all depend upon foreign business 
for that margin of trade which spells prosperity. 
In short having an endowment of agricultural re- 
sources beyond the strength of our domestic mar- 



AMERICA AND BALANCE OF POWER 243 

kets for the produce we must perforce sell the for- 
eigner foodstuffs as well as boots and clothes. 
Here is a paradox which seems to have received 
small attention from professional economists. 

In every respect, the World War has increased 
the dependence of the United States upon world 
markets even for the profitable disposal of its sur- 
plus capital. It has discharged a very large por- 
tion of its indebtedness abroad and has become an 
insistent money lender itself. In 19 15, European 
capitalists held $2,704,000,000 worth of American 
railway stocks and securities; two years later more 
than half of these holdings had been transferred to 
America; and the stream still continues to flow west- 
ward. In 19 14 more than one-fourth of the stocks 
of the United States Steel Corporation were held in 
Europe; today less than one tenth are in foreign 
hands. The crisis induced in London, long the 
money center of the world, by the exigencies of 
the war, led to the phenomenal rise of New York. 
To sustain their credit here for huge borrowings, 
England and France opened their strong boxes and 
sent across the sea the very finest of their gilt edge 
securities. As a keen French economist puts it: 
"One fact dominates all others: the rise of the 
United States to world hegemony. Lord Robert 
Cecil has compared the position of the United 
States after the Great War with that of Great 
Britain after the Napoleonic wars. That compari- 
son is not quite exact; because the British hegemony 
was then essentially European while that of the 
United States today is universal. An immense 



244 CROSS CURRENTS IN EUROPE TO-DAY 

reservoir of raw materials, of manufactured prod- 
ucts, and of capital, the United States has become 
an economic centre and financial centre in connection 
with which all the world must work and trade." 
Fact, stern, and tremendous as Carlyle might say, 
indubitable and fateful. Beside it all rhetoric 
fails. The loom on which is woven the texture of 
world politics has been brought across the sea and 
the picks of its flashing shuttle can be counted in the 
financial columns of any great New York daily. 

The United States has, therefore, entered upon 
the role long played by England and France as an 
international banker and money lender. The vis- 
ible signs of these new activities are the numerous 
American banking houses which are to be found in 
the principal streets and squares of European cities. 
The Morgan House and the Bankers Trust Com- 
pany look upon the monument erected to Napoleon's 
glories in Place Vendome. If you will turn to the 
financial section of such a metropolitan paper as the 
New York Times, you will see the statistical record 
of American operations in foreign finance. Only 
recently the transactions in foreign government 
bonds upon the Stock Exchange have become so 
great as to require a separate section of the daily 
statement. Often such transactions occupy one- 
fourth of the space given to the day's record. The 
list of bonds bought and sold on a single day is both 
interesting and full of meaning. The list includes 
Argentine, Chinese Railway, City of Berne, Bor- 
deaux, Christiania, Copenhagen, Lyons, Marseilles, 
Rio de Janeiro, Tokio, Zurich, Danish Municipali- 



AMERICA AND BALANCE OF POWER 245 

ties, Department of the Seine, Dominican Republic, 
Dominion of Canada, Dutch East Indies, French 
Government, Japanese Government, Belgium, Den- 
mark, Italy, Sweden, Chile, Cuba, Uruguay, San 
'Paulo, Queensland, Rio Grande do Sul, Swiss Con- 
federation, United Kingdom of Great Britain and 
Ireland, Brazil, and Haiti, not to mention the de- 
faulted securities of Russia and Mexico. When to 
the sales of these government bonds are added the 
transactions in the currency and bonds of Central 
and Eastern European powers and the transactions 
in the stocks and obligations of foreign industrial 
corporations, it becomes apparent that Ameri- 
can investors are deeply involved in the fate of gov- 
ernments and enterprises in all parts of the world. 
Almost every week records the floating of a new 
loan to some foreign city or country or railway al- 
ready staggering under a burden of debt. The 
rates are high, the commissions enormous, and the 
risks correspondingly great. 

In accordance with a custom, consecrated by time, 
the bondholders, whenever a disturbance is threat- 
ened or a default is at hand, look eagerly to the 
government at Washington to support their inter- 
ests diplomatically if not more vigorously. The 
genial American public, that takes up millions of 
oil stocks every year, seizes eagerly at the oppor- 
tunity to get seven and eight per cent on the bonds 
of foreign countries and so every new loan is re- 
ceived with enthusiasm. Let this process go on for 
fifty years, and the people of the United States will 
have reconditioned Europe and Asia, and at the 



246 CROSS CURRENTS IN EUROPE TO-DAY 

same time created an interest obligation that will 
either flood our markets with European goods by 
way of repayment, or raise the dollar to a ruinous 
height in the exchanges of the world. They will 
also have incurred a gigantic financial risk which 
a new war or a social revolution in Europe would 
transform into widespread ruin with its correspond- 
ing effects on our political issues. In short, the 
United States, through the investment of capital, 
has become a silent partner in the fate of every es- 
tablished order in the world. Unless we are to as- 
sume on the basis of the experience of the past three 
hundred years that there will be no more World 
Wars or social cataclysms, it is safe to conjecture 
that days of greater trouble are ahead, whether we 
enter the League of Nations or stay out of it. Once 
a great European war merely deranged our foreign 
trade; in the future it will disturb every investor in 
every village Main Street. Entangling political 
alliances may be pieces of paper, as the past has 
shown, but the texture of the economic alliance is 
woven of tougher materials. Politics comes after 
the fact. The gilt-edged pieces of parchment 
handed out to American investors will speak louder 
than the silver tongues of professional orators. 

In industry, as in finance, the upward swing of 
the United States after 19 14 was incredible in its 
swiftness and majestic in its range. Our old com- 
petitors in Europe were not only paralysed by war 
activities; they clamored louder and louder for 
the products of American mills, mines, and factories. 
Measured in tons of steel, pounds of copper, and 



AMERICA AND BALANCE OF POWE.R 247 

bolts of cloth, the sales of the United States abroad 
between 19 14 and 19 18 were nothing short of stag- 
gering. We supplied not only belligerents in Europe, 
but their former customers in South America, Asia, 
and the islands of the seas. Colossal factories 
sprang up on our soil. Old plants were enlarged and 
extended. Thousands of new workers were drawn 
into the cities from the countryside, especially as 
immigration fell off. American capital was amassed 
in stupendous quantities and preparations were 
made to seize the empire of world trade. Having 
an immense home market with the corresponding 
advantages of large-scale production, American 
business men prepared to lead the world in industry 
and finance. They were even able to induce a 
Democratic Congress, in spite of its inveterate sus- 
picion, to enact the Webb law authorizing the for- 
mation of gigantic combinations to develop and ex- 
ploit foreign markets. 

In the normal course of things, if the history of 
England and Germany is our guide, a merchant 
marine and sea power follow the growth of foreign 
business. In this sphere also the trend of Ameri- 
can economic development is true to form. On the 
eve of the World War, the American merchant 
marine was an almost negligible factor upon the 
high seas. It is true that long ago our wooden 
ships were upon every ocean and our sailors rivalled 
in skill and daring the best upon the wave; but the 
glory of our enterprise upon the waters vanished 
during the Civil War. After 1865 the record of 
nearly every year showed a decline. In 1861 



248 CROSS CURRENTS IN EUROPE TO-DAY 

American ships brought to our shores more than 
one-half, in values, of all the goods imported; in 
1 9 13 they carried only about eleven per cent of 
the values. Meanwhile the tonnage of ships for 
oceanic trade fell from 2,547,000 to 1,928,999 re- 
ducing the United States to a position below that 
of England, Germany, and Norway. During the 
same period the proportion of exports carried from 
our shores in American ships dropped from 
seventy-two per cent in values to nine per cent. 
Americans, busy with the development of their con- 
tinent, and content with their lake and coastwise 
trade, let foreign ships carry their exports and im- 
ports. The planters and farmers of the country re- 
jected every proposal to build a merchant marine 
by national subsidies — the only device which Ameri- 
can capitalists could offer as a means of bringing the 
ocean carrying trade into American hands. 

So things stood in 19 14 when the war drove the 
German merchant marine from the seas and com- 
pelled the other belligerents to commandeer ships 
for military purposes. Then the United States 
found itself in the presence of a crisis similar to that 
induced by the Napoleonic wars. One hundred 
years before, cotton, tobacco, corn, and bacon from 
American plantations and farms lay wasting at the 
docks for want of ships to carry them abroad. In 
19 14, the owners of vast masses of manufactured 
goods as well as the owners of farm produce clam- 
ored for ships. Thus it happened that the Demo- 
cratic party, which many years before had with- 
drawn subsidies from the American marine, found 



AMERICA AND BALANCE OF POWER 249 

itself confronted by a trying situation. The cry 
for ships went up on every hand. It was no longer 
the steel makers and the owners of ship yards alone 
that were heard in the lobbies of Congress. The 
munition makers needed ships. The farmers and 
planters needed them. So the Democratic party, 
the party of the less government the better, like all 
parties, laid aside theories in the presence of com- 
pelling facts and set about creating an American 
marine. Without utterly repudiating the teachings 
of half a century, it could not openly resort to the 
subsidies and bounties it had so long and so passion- 
ately denounced. But the ships had to be built. 
There was another alternative. The government 
itself could go into ship building. In 19 16, the 
Shipping Board was created for that purpose. 
Soon the war came to America. Then with lavish 
grants from the public treasury ships were built 
with a speed that astonished the world. 

Thanks to what appears to be a historical ac- 
cident, the United States has now become one of the 
great oceanic carrying powers. In 19 14 our ship 
yards turned out 200,000 tons of shipping while 
those of Great Britain turned out 1,683,000 tons. 
In 19 1 8, our yards launched 3,000,000 tons while 
the English yards set afloat 1,348,000 tons'. All 
around our long coast lines American ingenuity was 
applied with astounding zeal and marvellous results. 
The experiment was costly, for money was spent 
like water, but "the goods were delivered." 
Within the course of five years the American flag 
was restored to its old preeminence on the high seas. 



250 CROSS CURRENTS IN EUROPE TO-DAY 

In the Atlantic and the Pacific new steamship lines 
made their appearance bidding for freight and pas- 
senger business. New shipping offices were opened 
in all the chief ports of the world. An ever increas- 
ing proportion of our exports and imports was car- 
ried in American bottoms. The steamship compa- 
nies of Europe found themselves face to face with 
a new and formidable competitor. In 1920 the 
total number of American vessels, registered as en- 
gaged in foreign trade and whale fishing, showed a 
tonnage of 9,928,595, to say nothing of the 6,395,- 
429 tons engaged in coastwise and internal trade. 
In 19 1 8 the entire merchant marine of the United 
Kingdom amounted to 10,000,000 tons in round 
numbers. Thus it happened when the war stopped 
that the world was overstocked with merchant ves- 
sels and in every harbor steamers and sailing ships 
lay rusting and rotting. Then the great cry went 
up that the government which by lavish expenditures 
had built the ships should subsidize those into whose 
hands they passed at a nominal cost. With the eco- 
nomics of this great transaction, we are not con- 
cerned. The striking fact is established that the 
United States has become within six years one of the 
first oceanic carriers of the world, a formidable com- 
petitor of all the maritime nations. 

Coincident with this growth in the merchant ma- 
rine was a tremendous stride forward in battleship 
construction. Until the Spanish war, America was 
not reckoned among the great sea powers, although 
her sailors had given a good account of themselves in 
many contests upon the ocean. After Manila Bay 



AMERICA AND BALANCE OF POWER 25 1 

and Santiago, however, increasing attention was 
given to the navy and in 19 14 the United States 
ranked third in naval strength. Then began a pe- 
riod of feverish activity marked by constantly in- 
creasing acceleration. In 1920, the Navy General 
Board reported its grand designs: "A navy second 
to none recommended by the General Board in 19 15 
is still required today. But in addition the great 
war has shown the importance of unimpeded ocean 
transportation for commerce. If either belligerent 
loses the control of the sea, the national fighting 
power and endurance are greatly affected. In time 
of peace a gre'at and developing country needs a 
proportionately great merchant fleet of its own to 
insure its markets and preserve its commerce from 
subservience to rival nations and their business." 
That report struck home and its spirit was reflected 
in the new building program. So rapid was Ameri- 
can progress that experts were able to calculate that 
by 1926 the fighting power of the United States on 
the sea would surpass that of Great Britain. The 
long supremacy inaugurated in the defeat of the 
Armada was on the verge of passing to America 
when the Washington conference called a halt in 
competitive armaments. 

So out of the World War emerged a new America, 
first among the investing, industrial, commercial, 
maritime, and naval powers of the earth — a coun- 
try endowed with an immense productive equipment 
and ready to penetrate the most inaccessible markets 
of the most distant lands. At the same time, a 
paralysis of Europe cut down the demand for Ameri- 



252 CROSS CURRENTS IN EUROPE TO-DAY 

can agricultural produce and manufactured goods, 
and the destruction of the Russian and German 
empires gave a new and startling turn to events in 
the Orient, leaving Japan without the support of 
any great power save England. It was inevitable, 
amid these circumstances, that we should witness a 
burst of American activity in the Far East. 

This is of course a new emphasis rather than a 
new factor for Oriental trade had been an important 
element in American economy and politics since the 
maturity of the Pacific seaboard states, especially 
since the acquisition of the Philippines and the open- 
ing of the Panama canal. The Pacific has become 
the new theatre. It has been said that the drama 
of antiquity was played on the shores of the Medi- 
terranean and that the drama of the modern world 
has been enacted on the shores of the Atlantic. The 
drama of the future is preparing on a more majestic 
stage where teeming millions stand ready to take 
part in it. The curtain has risen upon this new 
drama. The actors are in their places, but no liv- 
ing mind can divine even the first act to say nothing 
of the denouement. Asia is old, wise, fertile in 
ideas and rich in potential resources. It had its 
empires, its religions and philosophies long before 
the geese cackled on the banks of the Tiber. Many 
conquerors have tried their fortunes there. Eng- 
land has brought the vast southern peninsula under 
her imperial dominion, but her subjects stir ominously 
and the solid structure may in time dissolve. Japan, 
aroused from her lethargy by Yankee enterprise, is 
equipped in wealth, industrial power, and military 



AMERICA AND BALANCE OF POWER 253 

strength to extend and defend her mighty hegemony. 
China, huge, amorphous, beset by a thousand ills, 
threatened with dissolution, and restless under the 
influence of western ideas lies prostrate but, having 
survived a hundred conquests and conquerors, may 
yet smile in her enigmatic way upon the Lilliputians 
who assail her. Russia, at present broken and 
powerless, seems out of the play, but that is an 
illusion except to those who reckon human affairs in 
terms of flags and states. The Russian people 
multiply with the passing years and they push out 
upon the Asiatic plains with the relentless force of 
an Alpine glacier. Those who occupy the earth and 
till the soil at their feet will in the long run possess 
it. Russia, the land of Tolstoi and Lenin and 
Sazonov and Nicholas Romanov, still lives and will 
again play a leading part in the drama that unrolls 
in the Pacific basin. 

The first speeches of the American actors have 
already been delivered. The policy of "the Open 
Door" has been announced. It has an immense 
advantage. It has an ethical ring. It respects 
the integrity, sovereignty, and territory of the Chi- 
nese nation. It contemplates no military aggression, 
no forcible annexations, no political power. It 
merely asks that all nations have equal rights to go 
and come, buy and sell, invest and collect in China. 
In theory it corresponds to the modern ideal of 
free commerce, though it may mean that in prac- 
tice immense monopolies may be built up, monopolies 
such as have arisen in Europe and the United States 
out of the same freedom of commerce. In theory 



254 CROSS CURRENTS IN EUROPE TO-DAY 

it meets the approval of China, for China, naturally 
anxious to preserve her territorial unity against 
foreign domination, welcomes assistance. While 
thus corresponding to China's immediate desires and 
expressing an ethical doctrine, the open door policy 
also satisfies the practical interests of the United 
States, at present. The seizure and government 
of Chinese territory would involve difficulties, finan- 
cial and administrative; if opportunities of trade 
may be secured without this hazard, territorial an- 
nexations would be exercises in foolhardiness. 

The belief in our own disinterestedness in the 
pursuit of the open-door policy is so wide-spread that 
any opposition to it on the part of other countries 
concerned in the Orient is viewed as a manifestation 
of unwarranted ill-will. Undoubtedly American 
policy offers a striking contrast to the policy of pene- 
tration and aggression followed by many other 
powers. Nevertheless, it does not appear to be en- 
tirely benevolent to the seasoned diplomats of the 
Old World, as the papers recently published from 
the Russian archives show. In these papers, the 
American State Department is represented as aiding 
vigorously in the economic penetration of China 
and as supporting American banks with interests hos- 
tile to those of the other powers. It is not necessary 
to accept these criticisms at face value or on the 
basis of them to entertain doubts as to the correct- 
ness of American diplomacy. That is not the point. 
The heart of the matter is that neither Europeans 
nor the Japanese look upon American imperial meth- 
ods in the Orient as different in any essential re- 



AMERICA AND BALANCE OF POWER 255 

spect from those of other powers. The American 
goal, they say, is the same, namely, opportunities 
for profitable trade and investment, and as the Phil- 
ippines bear witness, territorial expansion is not 
avoided when it becomes necessary. The spirit 
of cynicism and doubt as to the ultimate intentions 
of America in the East, though we may vigorously 
condemn it, must nevertheless be understood if 
we are to gauge correctly forces of the future. 
Nowhere is this spirit more accurately reflected than 
in an article by an eminent French publicist, in the 
Mercure de France, for January, 1922. This single 
passage gives the heart of the matter: 

"The realist, the positive, and especially the finan- 
cial, mentality which is the true characteristic of the 
Yankee and his raison d'etre, has been profoundly 
stirred by the situation created in the United States 
during and after the war — a situation which he had 
not foreseen and which is presented under the form 
of a genuine paradox. Enriched in that conflict 
to the point of securing almost all the gold of the 
world, North America nevertheless is passing 
through a crisis of appalling proportions; unemploy- 
ment, a paralysis of the export trade, and all the 
economic calamities, now oppressing American citi- 
zens, fell upon them at the same time as an excep- 
tionally favorable state of exchange and an unex- 
pected abundance of treasure. It occurred at once 
to the minds of these practical men that it was 
necessary henceforward to secure a market other 
than that afforded by Europe, a field of action in 
which their preponderant or semi-sovereign influence 



256 CROSS CURRENTS IN EUROPE TO-DAY 

will permit them to sell their products and their 
primary materials under conditions of exchange 
which they will regulate themselves. Thus they will 
avoid as far as possible the economic laws which, in 
their operation, have become so dangerous for them 
in Europe. Since they were powerless in Europe to 
regulate the value of money which depends upon 
a number of circumstances — upon a state of affairs 
peculiar to the Old World and beyond their control, 
— it was urgent that they should have at their dis- 
posal an Asiatic country where they could act, direct, 
and organize at their pleasure and where their com- 
merce would not encounter the same perils as among 
their old customers. China is there, immense and 
ready, they think, to receive all authorities, and so 
disorganized that she is ready to accept anything 
they wish to impose upon her. Hence there were, 
even during the war, missions of all sorts, economic, 
financial, religious, educational, and recreational 
sailing from Frisco to the Middle Kingdom. 

"At that moment, Japan began to be disturbed. 
For other reasons than the United States, even 
for opposite reasons, Japan felt the need of extend- 
ing her influence over the great Yellow Republic; 
above all for reasons connected with natural re- 
sources. Wanting in coal and iron, Japan must of 
necessity possess these things without depending 
upon any powerful nation. Moreover her seventy- 
seven million people are crowded into a country 
about as large as France and at any price it was 
necessary to search for an outlet for emigrants. 
In short, with the United States established in 



AMERICA AND BALANCE OF POWER 257 

China, there was at her gate an enemy which had 
shown a tenacious hatred for her and an unchanging 
contempt for the yellow race, since, according to the 
Yankee conception of things, the yellow man, who is 
only a charming being when one visits him to get his 
money, becomes intolerable when he asks for simple 
reciprocity. . . . Mr. Hughes has proposed that 
the American republic should dominate the 
Pacific — twenty-eight million more inhabitants than 
Japan to undertake the economic conquest of China, 
eight super-battleships more than the Mikado 
possesses to curb his desires — there are the 
powerful trump cards, and if America succeeds 
in making them serve her purpose, she will have a 
beautiful party. Although officially disinterested 
for the moment in the affairs of Europe, 
she sees that they are being reintegrated secretly 
in general policy through financiers who meet 
in their private chambers and associate with them 
selves at the council table some Anglo-Saxon 
business men and some Germans who more than 
ever divide the world." Such is a view of American 
policy now, by an eminent French publicist. How 
much untruth there is in it each may decide for him- 
self according to his knowledge. Now that we 
have set out upon the way it is wise to see ourselves 
as our critics see us, for it is our critics, not our 
friends, who will make trouble for us. 

Whether we accept or reject the criticisms of the 
French observer, we cannot overlook the fact that 
the widely-heralded Washington conference was 
related mainly, even almost exclusively, to Pacific, 



258 CROSS CURRENTS IN EUROPE TO-DAY 

not European, problems. Though associated in 
the minds of some with various world enterprises 
such as the League of Nations, it was in fact con- 
fined in its chief activities to the practical adjust- 
ment of Pacific matters in such a way as to facilitate 
the prosperity of American trade. When the con- 
ference was first called, many enthusiasts began to 
see visions of general disarmament and universal 
peace, but President Harding sharply reminded 
them that nothing of the sort was contemplated. 
He had in view reducing the cost of warlike prepara- 
tions in time of peace, to the great relief of the bur- 
dened taxpayers, and settling certain specific matters 
likely to cause friction among the powers concerned. 
The two projects were closely knit in the realm of 
fact. As President Harding said in his address to 
the Senate on February 9, 1922, in submitting the 
results of the conference to that body: "Much as 
it was desirable to lift the burdens of naval armament 
and strike at the menace of competitive construc- 
tion and consequent expenditures, the Executive 
branch of the Government, which must be watchful 
for the Nation's safety, was unwilling to covenant 
a reduction of armament until there could be 
plighted new guarantees of peace, until there could 
be removed probable menaces of conflict." Atter 
this plain declaration of prosaic fact, President 
Harding went to the heart of the matter. "We 
have seen the eyes of the world," he said, "turned 
to the Pacific. With Europe prostrate and peni- 
tent, none feared the likelihood of early conflict 
there. But the Pacific had its menaces and they 



AMERICA AND BALANCE OF POWER 259 

deeply concerned us. Our territorial interests are 
larger there. Its waters are not strange seas to us, 
its farther shores not unknown to our citizens. 
. . . We covet the possessions of no other power 
in the Far East and we know for ourselves that we 
crave no further or greater governmental or terri- 
torial responsibilities there. Contemplating what 
is admittedly ours, and mindful of a long-time and 
reciprocal friendship with China, we do wish the 
opportunity to continue the development of our 
trade peacefully and on equality with other nations." 
When all the rhetoric, ceremonials, and formalities 
are laid aside, there is the sum and substance of the 
whole business. "The Pacific had its menaces and 
they deeply concerned us." 

What were those menaces in fact and deed? 
Who made those menaces? No informed person 
is under any delusions on this matter. Russia, long 
the aggressor and high chief engineer of intrigues 
against Chinese territory, is paralyzed and power- 
less for the present and the indefinite future. 
France, though possessed of a huge Indo-Chinese 
empire, offers no serious challenge. Germany is 
bankrupt in military power and can do no more than 
make commercial gestures. There remain England 
and Japan. They are the only powers in a position 
to encroach upon Chinese territorial integrity, and 
in 192 1 these two powers were bound by an alliance. 
"The Pacific had its menaces." They were real; 
they were two-fold; they were united, and the 
"United States at the same time had no intention of 
surrendering any of the opportunities of American 



260 CROSS CURRENTS IN EUROPE TO-DAY 

merchants, manufacturers, and financiers in China. 

Thus it happened that the desires of the tax- 
payers for relief and the pacific aspirations of the 
American people, coincided with a genuine crisis in 
the far eastern relations of the American Govern- 
ment. For eight years conditions had been abnor- 
mal. President Wilson, as the spokesman of plant- 
ers, farmers, and trade unions, did not continue the 
aggressive policy pursued by the Secretary of State, 
Philander Knox, in the advancement of American 
trading and investing interests in the East. More- 
over the war had dislocated forces, engaged the 
energies of England, paralyzed Russia, eliminated 
Germany, and given Japan a free hand. In fact 
between the retirement of President Taft and the 
inauguration of President Harding, Japan had 
made immense strides in the extension of her hegem- 
ony over China. At first she operated in con- 
junction with Russia, with the consent of England. 
Then in the midst of the war, Japan made her 
famous Twenty-one Demands which in effect prom- 
ised to destroy the remnants of Chinese sovereignty. 
Mr. Wilson, so zealous in the interest of universal 
peace and the League of Nations, approved the 
Lansing-Ishii doctrine, let Shantung go to Japan, 
and neglected Yap. 

It is in the light of these things that the results 
of the Washington conference must be examined. 
First, there is the naval holiday and the Four Power 
treaty. As all conversant with naval affairs know, 
by 1924 or 1926 at the latest, according to the 
prevalent rate of construction the United States 



AMERICA AND BALANCE OF POWER 261 

would have been supreme at sea over Great Britain 
in fighting units and weight of metal. But Great 
Britain was united to Japan by a treaty of alliance 
and the two constituted a formidable power. By 
offering debt-burdened Britain a relief in naval con- 
struction the United States induced her to cut loose 
from a separate alliance with Japan. Hence the 
naval holiday. It is an immense gain to the tax 
payers. It gives experts time to study the whole 
question of sea fighting in view of the great prob- 
ability that Dreadnoughts and Super-Dreadnoughts 
are as obsolete as wooden walls. 

The accompanying Four Power treaty is likewise 
susceptible of many interpretations as to origin, pur- 
pose, and implications. The terms of the instru- 
ment are very general. The high contracting 
parties agree to respect one another's insular pos- 
sessions in the Pacific and to enter into communica- 
tion in case any disturbance arises in that connec- 
tion. On its face that declaration appears to be a 
truism. President Harding informed the Senate 
and the country that "nothing in any of these 
treaties commits the United States or any other 
power to any kind of alliance, entanglement or en- 
volvement." But as if baffled by his own state- 
ment, he added: "It has been said, if this be true, 
these are meaningless treaties and therefore value- 
less. Let us accept no such doctrine of despair as 
that." It has been stated, but not officially, that the 
purpose of the Four Power treaty was to destroy 
the Anglo-Japanese alliance and if this is true the 
somewhat uncertain terms become full of meaning. 



262 CROSS CURRENTS IN EUROPE TO-DAY 

At all events the way is made clear for the pursuit 
of the open-door trading policy in China. 

More precise is the treaty laying down the prin- 
ciples to be pursued with regard to China. The high 
contracting parties once more proclaim the sover- 
eignty, the independence, the territorial and ad- 
ministrative integrity of China, and free and equal 
opportunity for commerce and industry. They 
agree that they will not seek or support their na- 
tionals in seeking: (a) any arrangement which 
might purport to establish in favor of their in- 
terests any general superiority of right with respect 
to commercial or economic development in any 
designated regions of China; (b) any such mo- 
nopoly or preference as would deprive the nationals 
of any other power of the right of undertaking any 
legitimate trade or industry in China or of partici- 
pating with the Chinese government or with any 
local authority in any category of public enterprise, 
or which by reason of its scope, duration, or geo- 
graphical extent is calculated to frustrate the prac- 
tical application of the principle of equal oppor- 
tunity. 

Two things are to be noted about this treaty. 
The language, though perhaps as specific as circum- 
stances admitted, is nevertheless general in char- 
acter. It is open to a variety of interpretations in 
the application. It is less specific and pointed than 
the language of the famous Algeciras compact 
which was supposed to put an end to friction among 
the powers in Morocco. It does not contain the de- 
tailed provisions, limitations, prohibitions, and speci- 



AMERICA AND BALANCE OF POWER 263 

fications laid down in 1906 for the conduct of the 
Sultan's estate. That is the first point to be noted. 
The second is that it is, like the Algeciras compact, 
applicable to a country in disorder and revolution, 
to a rapidly changing situation, not to a settled 
society like the United States or England where 
commerce can be carried on without recourse to 
armed force. When France was reproached with 
having torn up the compact of Algeciras, she could 
with justice reply that local conditions were such that 
its application, according to the ordinary norms 
of legal procedure, was impossible. So it was. 

CONCLUSIONS 

Any one who has given two or three years to the 
study of the course of affairs in Europe since 19 18 
will hesitate to advance with firm assurance very 
many "conclusions." The pages which follow 
should really be entitled "A Few General and Ten- 
tative Reflections." Europe is in an unstable 
equilibrium and serious changes may take place any 
moment. Generalizations are dangerous. Proph- 
ecy is more dangerous. But the human mind longs 
for something more positive than a glimpse at a 
swirling tide. Hence these last words. 

The first reflection is perhaps the easiest to for- 
mulate. There are many signs of European re- 
covery in the realm of fact. The reconstruction 
work in France has been truly marvellous. The 
basic industry, agriculture, though disturbed by 
agrarian changes in Eastern Europe, is being re- 



264 CROSS CURRENTS IN EUROPE TO-DAY 

stored and a decided turn upward may be expected 
shortly. The quarrels among the new nationalities 
are being allayed by negotiations and treaties and 
new bonds of trade and intercourse are taking the 
place of those snapped by the war. In this sphere 
time will bring healing. 

Secondly, finance and industry in Europe are in a 
state of chaos and conditions are growing worse 
rather than better. If the analysis given in Chap- 
ter IV is sound, it is difficult to see how business can 
be brought to its old course without reducing rep- 
arations and inter-allied debts, scaling down 
domestic debts, and restoring the currency to a 
gold basis. Europe must soon choose between 
some kind of a general economic constitution and a 
re-alignment of powers for more costly and deadly 
conflicts. 

Thirdly, the principle of conscious and systematic 
support for commercial enterprise has been adopted 
by England, France, Germany, and Italy, and the 
capitalists of these countries are driving forward to 
the conquest of new markets with a greater zeal 
than in the days before the war. There is this dif- 
ference : they are more effectively organized within 
their respective countries and more vigorously sup- 
ported by their respective governments. The res- 
toration of Europe without a constitution designed 
to mitigate these rivalries will mean a return to 
secret diplomacy and the armed peace, preparatory 
to a reenactment of the great drama which we 
have just witnessed. What would be left of 
European civilization after several repetitions of 



CONCLUSIONS 265 

this cycle may be left to the imagination. But if 
Europe cannot learn from experience, it is hardly 
probable that more pronunciamentos from Wash- 
ington will have any effect upon the course of events 
there. 

Fourthly, there seem to be only two policies open 
to the United States. The first is to enter into a 
general European council and attempt by interna- 
tional pressure to compel a readjustment of indem- 
nities, debts, tariffs, and currencies; that is, to join 
in forcing the various nations to do what they must 
do before the course of business is returned to a 
pre-war basis. If any one will read the European 
press closely, he will see what grave complications 
this would involve, what new hatreds, what new 
discords. In my opinion it would be unwise for 
the United States to attempt to play the part of a 
general receiver or a big brother for Europe tor- 
tured by the inevitable after-war hatreds. This 
is not because we are wanting in the spirit of help- 
fulness, but because in this case intermeddling is 
likely to do more harm than good. The other 
course is that now pursued, except as far as Russia 
is concerned. It is the course of allowing Europe 
to set its own house in order under the stress of its 
own necessities and experiences. Its statesmen 
know little enough, perhaps, but they know Europe 
better than any agents sent out from Washington. 

Fifthly, if the United States leaves Europe to its 
own devices in recovering its economic prosperity, 
then logic as well as common decency requires our 
government to refrain from publishing periodi- 



266 CROSS CURRENTS IN EUROPE TO-DAY 

cal homilies on the place of Russia in Europe's 
affairs. 

Sixthly, new loans to European countries by 
American banking houses, though they yield high 
commissions and high interest rates at present, 
merely add to the burdens and confusion of Europe 
and help postpone the day of fiscal reckoning which 
all continental countries must face sooner or later. 
Indeed these very loans may involve us, in spite of 
ourselves, in grave problems of readjustment now 
facing European statesmen. 

Finally, the menaces that confront the United 
States today are not European. As President 
Harding has said, they are in the Pacific. What 
does that mean? What does it imply in terms of 
American policy and of obligations for American 
citizens? President Harding has given us the key. 
He says that we do not want any more territory 
in the Pacific, but that we want trade. That means, 
in plain English, that we want markets in China in 
which to sell goods; we want opportunities to in- 
vest money with good commissions and high rates of 
interest; and we want concessions to build railways, 
exploit natural resources, and develop Chinese in- 
dustries to our profit. Assuming that the open 
door is really open, that means intense and active 
rivalry with England, France, and Japan in the Far 
East. So the great question is: "Shall the gov- 
ernment follow trade and investments?" 

That is the crucial question. It is a question 
fraught with momentous significance for this coun- 
try. Behind all the notes, treaties, speeches, and 



CONCLUSIONS 267 

declarations, that is the one great issue in foreign 
affairs before the people of this country. It must 
be considered without bitterness or partisan rancor 
in the light of national interests and national des- 
tiny. There must be no sneering criticism of our 
manufacturers and bankers. They are following 
economic opportunities as other men do. Nothing 
short of the interest of the whole nation should 
come into the decisions upon policy. 

At this fateful juncture in American history, 
there are three courses open to those who fain 
would mould the world to their hearts' desires. 
There is first the policy of positive imperialism, 
naked and unashamed. Under it, our government 
would give vigorous support to merchants, bank- 
ers, and manufacturers in all parts of the earth in 
their search for trade and investment opportunities. 
It presupposes armies and navies adequate to all 
exigencies and strong enough to compel respect 
for all decisions taken in behalf of national eco- 
nomic interests. The Department of State, oper- 
ating mainly in secret through a corps of consuls 
and diplomats, would become the adjunct to in- 
dustrial and investment interests. A merchant 
marine would be subsidized, and government sup- 
port given to the prosecution of commercial ad- 
vantages. Discriminatory and preferential tariffs 
would be constructed with reference to the promo- 
tion of American industries. 

This policy is commonly defended on two grounds. 
Some say that it is the natural, inevitable, and irre- 
sistible development of an imperial race — the 



268 CROSS CURRENTS IN EUROPE TO-DAY 

manifest destiny of every nation to expand, con- 
quer, and dominate. Possibly it is the decree of 
fate. If so, then all arguments for and against 
it are equally futile and irrelevant. 

Others, brushing aside such philosophy, say that 
imperialism is necessary to American prosperity, 
that we must sell more and more manufactured 
goods every year or perish. Let us examine briefly 
that hypothesis in operation. More billions in 
trade means bringing more business to American 
manufacturing industries and drawing more millions 
of people from Europe and from our own country- 
side into mines, mills, and factories. It means 
more billions in stocks and bonds in strong boxes 
and more millions of men, women, and children in 
industrial cities — a vaster aristocracy of wealth and 
a hugher proletariat. Whoever can contemplate the 
possibility of a hundred years of that development 
without thought of consequences lying beyond, de- 
serves to wear the badge of courage. Still the 
policy involved in it may be pursued without regard 
to the long future. 

Imperialism is not new. It offers no novel fea- 
tures to the adventurous spirit of man. The past 
affords ample records for the study of its processes, 
operations, and consequences. It cannot however 
be pursued today under the conditions of the past 
three hundred years. The experience of the British 
Empire is no guide to us now. The backward 
places of the earth are all staked out and in 
the possession of powers bent upon the kind of com- 
mercial and financial imperialism that is recom- 






CONCLUSIONS 269 

mended to us. Imperialism of the future will in- 
volve competitive risks far more dangerous than 
the risks of Pitt, Disraeli, and Sir Edward Grey. 
Still the policy is an intelligible one and is defended 
by some of the ablest minds of our generation. 
Ample support for it is to be found in the volumi- 
nous literature of the late German empire. 

There is before us, possibly, a second policy. It 
is covered by that term of opprobrium hurled at 
it by the devotees of imperialism, namely, "Little 
Americanism." Its implications are likewise clear. 
Let us examine them. According to this philosophy, 
the government of the United States would not lend 
diplomatic or any other kind of support to invest- 
ment bankers placing loans abroad, either in making 
them, collecting the interest, or insuring the prin- 
cipal. It would not use the army or the navy in 
the collection of debts due to private citizens. The 
government would feel under no greater obligation 
to a banker who made a bad loan in Guatemala than 
it would to a banker who made a bad guess in lend- 
ing money to a dry goods merchant in Des Moines, 
Iowa. It would not seize any more territory. It 
would discontinue the policy of annexing spheres in 
the Caribbean and would invite the Latin-Ameri- 
can countries into a cooperative system for settling 
all disputes in this hemisphere. It would give in- 
dependence to the Philippines and draw back upon 
the Hawaiian base. It would maintain an army 
and a navy adequate for the defense of our terri- 
tories, by universal service if necessary, and per- 
haps preferably. It might possibly contemplate 



270 CROSS CURRENTS IN EUROPE TO-DAY 

entering a League of Nations, provided all other 
countries were prepared to adopt a similar domes- 
tic policy. It would bend all national energies and 
all national genius upon the creation of a civilization 
which, in power and glory and noble living, would 
rise above all the achievements of the past. This 
policy, whatever may be said against it, has on its 
side at least the advantage and interest of novelty. 
The great power that pursued it might, indeed, sink 
down into dust like the empires of Tamerlane or 
Augustus, but at least the world's experiences would 
be enriched. 

There is finally another alternative, that of no 
policy at all, save the policy of drift and muddle. 
It would support our capitalists and merchants 
abroad, but not adequately. It would encourage 
them to pursue their economic interests and then 
fail to sustain them in a crucial hour. It would 
create, inadvertently, situations calling for imperial 
military and naval forces, but would not have the 
forces ready on the fateful day. It would follow 
in the paths of Alexander and Caesar but would be 
content with the philosophy of Buncombe County. 
Yet, under Providence many things might be accom- 
plished by this policy. It might land the nation at 
the gates of destruction; but that can be said of the 
imperial policy pursued by Rome and Germany. 
As in individual life we find our little plans and pur- 
poses but frail reeds in our hands, so in national 
life, the wisdom, understanding, and penetration of 
the best and most practical statesmen often prove to 



CONCLUSIONS 271 

be in the test of time and circumstance the weirdest 
of delusions. 

Here I take leave of the subject, saying with 
Bossuet, the good bishop: "All those who are en- 
gaged in the work of government are subject to a 
higher power. They always do more or less than 
they intend and their counsels have never failed to 
produce unforeseen effects. They are not the mas- 
ters of the turn given to affairs by the ages past. 
Neither can they foresee the course the future will 
take. Far less can they force it." Still who would 
not rather have the heritage of Athens than the 
legacy of Caesar? 



AUTHORITIES 

NOTE ON SOURCES FOR I, II, AND III 

The best account of English diplomacy before 
the War is Earl Loreburn, How the War Came 
(Knopf, 1920). Sir Edward Grey's speech on 
August 3, 19 14 is printed as an Appendix. For a 
vigorous indictment of English diplomacy, E. D. 
Morel, Ten Years of Secret Diplomacy and Truth 
and the War (Huebsch, 19 12 and 19 18) ; also 
Francis Neilson, How Diplomats Make War 
and Albert Jay Nock, The Myth of a Guilty Nation 
(Huebsch). A general brief survey, Reinsch, 
Secret Diplomacy (Harcourt, 1922). 

The great German collection is Die Deutschen 
Dokumente zum Kriegsausbruch in four volumes 
(Charlottenburg, 19 19). A splendid survey of 
these materials is given by Professor Sidney B. Fay 
in the American Historical Review, for July and 
October, 1920. In 19 19 the German Government 
instituted a committee of inquiry which has been in- 
vestigating the origins of the war. Two volumes 
have already been printed and a new series of fifteen 
volumes is announced as in press (American His- 
torical Review, October i92i,p. 178). 

The Austrian materials are not quite so volumi- 
nous. There is first a three volume collection, Dip- 
lomatische Aktenstiicke zur Vorgeschichte des 
Krieges, 1914. These papers cover the negotia- 

273 



274 CROSS CURRENTS IN EUROPE TO-DAY 

tions immediately preceding the war. They have 
been carefully analyzed by Professor Fay in the 
articles cited above. A second group of papers is 
A. F. Pribram, The Secret Treaties of Austria-Hun- 
gary. These go back to the treaty of alliance of 
1879. The first volume embraces treaties and the 
second collateral documents and notes. They ap- 
pear in English translation under the editorship of 
Professor A. C. Coolidge of Harvard University 
(Harvard Press). 

The most important French contribution is the 
Livre Jaune de 19 18, which contains materials rel- 
ative to the Russian Alliance. Selected and pub- 
lished by the French Government. Most of them 
are reproduced with comment by Welschinger, IJ Al- 
liance Franco-Russe (Alcan, 19 19). 

The Russian materials are widely scattered. Ap- 
parently there has been no such grand collection as 
the German Government had prepared. Shortly 
after they came to power, the Bolsheviki began to 
publish treaties and notes. The so-called Secret 
Treaties revealing the agreements among the En- 
tente Allies as to territorial dispositions were pub- 
lished in November, 19 17, and shortly afterward 
appeared in translation in the New York Evening 
Post and the Manchester Guardian. A Russian edi- 
tion in English, with a foreword by Leon Trotzky 
was also printed about the same time. Copies in 
the New York Public Library. From time to time 
additional papers from the Russian archives were 
published in the official organs Isvestia and Pravda. 
Files in the New York Public Library. Some of 



SOURCES I, II, AND III 275 

these papers were translated by the German Govern- 
ment and included in its Deutschland Schuldig? 
Deutsches Weissbuch iiber die V erantwortUchkeil 
der Urheber des Krieges (19 19). This appears in 
English translation also by the Germans: Is Ger- 
many Guilty? German White Book Concerning the 
Responsibility of the Authors of the War (Berlin, 
Heymanns, 1919). The chief collection of Russian 
papers is Siebert and Schreiner, Entente Diplomacy 
and the World, a volume of 762 pages in English 
translation. Published privately in New York by 
the Knickerbocker Press (1921) and for sale by 
Stechert and also by Brentano. Baron Siebert, a 
former secretary of the Imperial Russian Embassy 
in London, brings out these documents and vouches 
for their authenticity. Many of them can be 
checked up by notes from the German archives and 
by papers printed in Pravda and Isvestia. While 
it is not possible to verify and authenticate from of- 
ficial evidence all these papers and while it must be 
remembered that the collections are fragmentary, 
they do seem to fix beyond all question the broad 
outlines of European diplomacy between 1908 and 
1917. 

A new, authentic collection of Russian documents 
has just come from Paris: Un Livre Noir: Diplo- 
matic d'Avant-Guerre d'apres les Documents des 
Archives Russes. Preface par Rene Marchand. 
An admirable review by Baron Korff appears in the 
American Historical Review for July, 1922. 



276 CROSS CURRENTS IN EUROPE TO-DAY 
BIBLIOGRAPHY 

Alexinsky, G., La Russie Moderne and La Russie et 
I'Europe. 

Angell, Norman, The Fruits of Victory. 

Bass and Moulton, America and the Balance Sheet 
of Europe (1921). 

Baumont et Berthelot, L'Allemagne: Lendemains 
de Guerre et de Revolution (1922). 

Boret, V., La Bataille Economique de Demain 
( 1 9 1 8 ) Forcasting the economic war after war. 

Bouton, S. M., And the Kaiser Abdicates. 

Brailsford, H. N., After the Peace. 

Brunet, R., La Constitution Allemande (1921) 
Translation published by Knopf (New York) 
in 1922. 

Conference on the Limitation of Armaments 
(Washington Conference Documents) Senate 
Document, 67th Congress, 2nd Session, Num- 
ber 125, 1922. 

Cumming and Pettit, Russian-American Relations 
(1920). 

Decrees and Constitution of Soviet Russia (New 
York Nation Reprint). 

Delaisi, F., Oil: Its influence on Politics. 

Demangeon, Le Declin de I'Europe ( 1920) . To be 
had in English translation. 

Driault, E., Les Traditions Politiques de la France. 

Dutt, R. P., (ed), The Labour International Hand- 
book (1921) Allen and Unwin. 

Ferasson, L., La Question du Fer (1918). 

Gautier, L'Angleterre et Nous (1922). 



BIBLIOGRAPHY 277 

Graham, S., Europe — Whither Bound? (1922). 
Grumbach, S., Das Annexionistische Deutschland 

(I9I7)- 
Guest, L. H,. The Struggle for Power in Europe, 

1917-1921 (1922). 

Jouhaux, L., Le Syndicalisme et la C. G. T. ( 1920). 

Keynes, J. M., The Economic Consequences of the 
Peace and A Revision of the Treaty. 

Lanessan, Histoire de ['Entente Cordiale Franco- 
Anglaise ( 1916). 

Leger, L., Le Panslavisme et VInteret Francais. 

Lenin, N., The Proletariat Revolution; The Soviets 
at Work; The Land Revolution in Russia; and 
Les Bolcheviks et les Paysans. 

Lichtenberger et Petit, L'Imperialisme Economique 
Allemand. 

Marx, H., Handbuch der Revolution in Deutsch- 
land (1919). 

Morel, Africa and the Peace of Europe. 

Pasvolsky, L., The Economics of Communism and 
Russia and the Far East. 

Pratt, E. A., Rise of Rail-Power in War and Con- 
quest. 

Scheidemann, P., Der Zusa{mmenbruch (1921). 

"Spectator," Das Socialisierung sprohlem in Deutsch- 
land (1920). 

Spengler, O., Preussentum und Sozialismus (1921). 

Stier-Somlo, Reichsverfassung (1919). 

Streit, C, Where Iron is, There is the Fatherland. 

Tarle, A., La Preparation de la Lutte rlconimique 
par V Allemagne (1919). 



278 CROSS CURRENTS IN EUROPETO-DAY 

Trotzky, L., From October to Brest Litovsk; Ter- 
rorisme et Communis me; and Les Soviets et 
Vlmperialisme Mondial. 

Vanderlip, F. A., What Next in Europe? 

Wells, H. G., Washington and the Riddle of Peace. 



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